UK challenger banks and fintechs are making moves to ensure their services will be available to customers in the European Union after Brexit.
Starling was granted a banking passport into the Republic of Ireland last year, while Revolut has begun the process of applying for an e-money licence in Luxembourg. “This ensures that Starling can bring its service to customers in European markets when the platform is ready to launch in Ireland and beyond,” a Starling spokesperson told bobsguide.
“Using the cross-border passport to extend into Ireland brings Starling Bank closer to fulfilling its aim of providing everyone in the world with the opportunity for a healthy financial life.”
Due to the uncertainty surrounding Brexit, Nikolay Storonsky, co-founder and chief executive of Revolut told the FT recently: “It takes us six months to get an e-money licence and so we have applied for one in Luxembourg – just to be on the safe side.”
However, many remain tight-lipped about how they are positioning themselves for Brexit. Atom bank and Metro bank declined to comment on their Brexit preparations for this article.
On the fintech side, the concern as to whether the UK will remain its central hub in Europe remains unclear, despite the Government’s promise of £780m of extra funding for high-tech hubs, announced in early August.
Start-up TAINA solutions, which specializes in tax compliance, suggested Brexit could drive UK-based fintechs abroad.
“With geography, we are currently based in London, but most of my time is spent in the US,” says CEO Maria Scott. “Why the US? Because, the US moves much faster. Culturally, they are much more prepared to give new solutions a try, fail, and move on. They are more bullish than Europeans, in terms of trying new things. That’s why all our new customers are global institutions’ offices in the US.
However, while Scott acknowledges the US market moves much faster in terms of innovative developments, the UK’s current regulatory outlook is supportive of change.
“I think the UK, if you look at the regulatory jurisdiction, the regulatory framework, and the government support, there is a lot more here [in the UK] than anywhere else in the world.
“The Financial Conduct Authority (FCA) are so open and so helpful. They try to support us all. I don't know any other regulator in the world that does that. The Department of International Trade is brilliant. I would argue it's the best in its class for government support.”
EyesClear CEO Erkin Oksel, told bobsguide he expected issues to be ironed out: “I don’t believe that anyone is going to create an ecosystem where we won’t be able to sell to Europe, or where Europe won’t be able to sell to the UK.
“In terms of human resources and physical aspects, even before Brexit I was flexible about that subject. We will need to have a presence close to our clients in the geographic that we operate. It doesn’t matter if it is in the EU.”