Daily Fintech Conversations

On this election day, do you think UK can reclaim its Fintech Capital of the World title?

Do global players look at UK as an entry to Europe or the world? Can UK ventures compete on the global stage with the best from America and Asia!

Political events and choices shape the sandbox into which the finance industry plies its trade. Given how deeply finance is embedded in the entire economy, it usually takes significant (re)alignments to create new architectures. Modern “London” (ie post 1980) was created historically by at least three major aligned factors:

  1. favored industry status within the UK (attracting best and brightest / academic pipeline)
  2. favored staging ground for US financial technology expansion into Europe (introducing securitization, derivatives etc)
  3. favored offshore location for European finance (law, bonuses, light touch regs etc)

Arguably all three of those factors are now in decline: materially worse UK inequality vs European norm creates political instability in UK, deprives industry from its champion status. Financial crisis, renationalization and diverging EU/US/UK regulation limits the scope of introducing “shiny new toys” via offshore centers. Finally there is a tangible sense in the EU that (despite disasters like the Greek crisis), there are still options for viable EZ/EU financial landscape (banking union, capital markets union, eu fintech etc.)

The outcome of this is that - barring yet further unexpected developments, London will be in steady decline, mostly grand-fathering existing activities via short expiry passports. Now on the next question of where the European fintech capital will move, I don’t know… But my thinking has always been that the concept of a “financial capital” is flawed and unstable, especially in an EU context with multiple nations involved. We should take a leaf out of blockchain and think of a network of financial nodes, with no privileged information nodes extracting rents at the expense of all others…

Hit nail squarely on head - the Financial Capital story is a media story, not reality. 2.5 years ago this was what I found in Germany - and that is only one country in Europe: