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How has Fintech responded to Brexit?

Public AffairsDigital
How has Fintech responded to Brexit?

By Domenico Sorrento, Paul Sweetman and Johnny Thalassites

Fintech is a major sector contributing to the British, Irish, EU and European economies, and its influence is growing.

However, Britain’s departure from the European Union has made governments across the continent look at the space again. In this insights piece, Instinctif’s London, Brussels and Dublin offices assess how the sector has responded to Brexit.

Both candidates to succeed Boris Johnson as British Prime Minister – Liz Truss and Rishi Sunak – have said they want to strengthen the city through divergence. However, the EU is keen to capitalise if Britain fails to put together an attractive fintech policy and regulatory regime. They have introduced a digital finance package to start that process. In Ireland in particular, a fuller strategy can help turn its strong finance and tech sectors into a thriving fintech hub.

Fintech in the UK

Financial and professional services constitute 12% of British GDP and much of the regulatory regime has been determined at an EU level. Fintech investment has risen by 750 per cent in the past year – growing to £27.5 billion. Put another way, more than 600 M&A, private equity and venture capital deals have been finalised in the most recent 12 months, up by 27 per cent.

Building on this, businesses should note that Brexit may not result in the scale of change its proponents or detractors have predicted. A recent Treasury Select Committee report poured cold water on the idea of changing fintech rules, arguing Britain should not alter regulations or water down rules to boost competitiveness – as the country is already well placed to thrive in the space.

Liz Truss has written about the need to “accelerate” divergence in this area, and the Financial Services and Markets Bill will be an opportunity to do this. One option may be to give Ministers the power to “call-in” new regulatory proposals and intervene where it is in the public interest. The debate will be whether this results in greater accountability or increases the politicisation of the financial services regulatory system; something for businesses to pay close attention to, in any case.

Overall, for the UK, Fintech is a rapidly growing market and leading cities like London must draw the brightest and best global talent. New visas for foreign fintech workers and a central-bank digital currency could also keep Britain competitive in fintech, and we should anticipate these themes being part of the conversation between businesses and government going forwards.

Fintech in the EU

The European Commission believes it could capitalise on Brexit to become a leading voice in fintech, especially if British divergence does not accelerate. That is why it adopted a digital finance package, which includes a digital finance strategy and legislative proposals on crypto-assets and digital resilience, after Brexit.

The Commission recently introduced a provisional agreement on the regulation of crypto-assets (MiCA), putting an end to what it called a “crypto wild west” and a kick-starting a bid for the EU to set global standards in the digital space. The so-called Transfer of Funds Regulations also mean crypto-transfers can be tracked and suspicious trades can be blocked.

Taking a closer look at the number of authorisations provided to non-EEA headquartered payment and e-money firms across the different member states, it is clear that a large share of non-EU companies have opted for Ireland, Lithuania, Luxembourg, Malta and the Netherlands.

Fintechs are also finding success in Belgium – there are now around 320 fintech start-ups in the country, with an ecosystem supported by leading players such as Euroclear, Mastercard, Worldline, Isabel and SWIFT.

EU policy and regulation trends would indicate that the growing role of big technology companies in the financial services sector is going to face greater scrutiny. For example, the EU has signalled that these companies could be subject to antitrust investigations based on the “same activity, same risk, same rules” principle. The companies could even be included in financial regulatory frameworks and supervisory mechanisms.

Fintech in Ireland

Ireland is already a finance and tech hub, so putting the two together looks within reach. But the UK and the EU are both making changes to boost competitiveness, and so Ireland must keep looking for ways to stay ahead.

There are 350 fintech companies in the country, employing 7,500 people, and Ireland has produced several homegrown fintech unicorns such as Fenergo, Wayflyer and TransferMate. These sit comfortably alongside major technology investments from established international financial services companies including Citi, State Street and BNY Mellon.  

Dublin needs to create the right regulatory environment through policy interventions or face missing the opportunity to expand its fintech sector. The Irish Government should draft a dedicated National Fintech Action Plan to address this; the absence of such a plan separates Ireland from leading fintech jurisdictions. The Central Bank of Ireland (CBI) might also use its review of the CBI Innovation Hub to bolster its fintech capabilities, improve licensing process times and amplify its sectoral knowledge. Ireland is ranked just 18th in the Global Fintech Rankings and tenth in Europe – highlighting that it has room to grow to fulfil its potential in the space.


Fintech is a fast-moving sector. Instinctif Partners is here to help clients navigate the landscape and our Market Hub can support opportunities for quick wins and longer-term policy shifts in this area.  Brexit may yet make policy shifts necessary, and our team has expertise on the full range of regulatory approaches and environments in Britain, Ireland, the EU and across the continent.

About Market Hub

Our team of political experts understand UK-EU regulatory change better than anyone else. With specialists across London, Dublin, Brussels and Berlin, Market Hub is here to support your business in navigating through the ever-changing UK and EU markets.

Our team, comprised of former civil servants, regulatory experts and former Ministers, provides specialist knowledge to businesses to best understand and prepare for UK-EU divergence.  We unpack how political decisions are made, create ideal engagement opportunities with the right decision-makers, and most importantly shape outcomes for your success.

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