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Brexit has raised concerns among financial services organizations over the UK’s ability to lure tech talent from the EU in the future, per a report from TheCityUK.
TheCityUK further cites a LinkedIn Workforce report, which found that in the years since the Brexit vote, there's been a considerable decrease in graduates with the required tech skills in the sector moving to the UK, while a net migration of these graduates to the EU has been witnessed by UK hiring personnel and recruiters. The report added that the UK’s fintech sector is worth £7 billion ($9.3 billion) to the country’s economy.
Here’s what fintechs' concerns over Brexit mean:
- Their worries could be justified if the UK fails to reach a favorable deal with the EU. In the event of a no-deal Brexit or a deal that does not entail easy access to the EU’s financial markets and free movement of people from the bloc, the UK will likely struggle to both keep and add to its diverse workforce.
- The lack of deal will see the difficulty to lure tech talent added to fintechs’ other woes, such as the loss of passporting rights. A large number of financial institutions (FIs) have relocated outside the UK to prepare for Brexit: 275 UK FIs have have moved or are in the process of moving their operations to the EU, with Ireland being the biggest beneficiary of this shift, per a recent NewFinancial report.
It's worth noting, however, that while the March 2019 Brexit deadline is nearing, the UK could seek to delay the deadline, and a deal could still be reached that would give the country’s fintechs open access to the EU’s financial markets and talent pool.
The bigger picture: Despite concerns and any impact from Brexit, the UK has a lot to offer as a fintech center and could remain attractive to employees.
- London will remain a global fintech hub. Without a deal, companies that need EU passporting rights might relocate, or look at additional banking licenses outside the UK — as is the case for Revolut and Transferwise — but London should be able to maintain its standing as a global, rather than a European, fintech hub. Many fintechs will not need to relocate and could continue to be a good option for prospective employees.
- The UK’s financial services center is built on strong foundations. While the right talent pool is important for the continued growth of London’s fintech sector, other factors also play a key role, such as infrastructure, capital, supportive regulation, and favorable taxation. These additional factors create a fertile operational environment for fintechs and FIs and should not be considerably affected by Brexit.
Here’s what fintechs can do to hedge against any eventualities: To continue attracting tech talent post-Brexit, TheCityUK report recommends creating lasting partnerships with universities to better reach skilled individuals, while it also suggests looking at options such as training existing staff. Further, to mitigate any client concerns over Brexit, fintechs would do well to openly discuss their views of what might change post-Brexit and how they could respond: This would bring the added benefit of boosting their existing reputation for being honest with their customers.
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