https://lendit.wistia.com/medias/zmw4ew8yhx?embedType=async&videoFoam=true&videoWidth=640 London is the undisputed heavyweight champion of fintech, but it has found itself with a PR problem: Brexit. Will...
Karen Mills is a Senior Fellow at the Harvard Business School focused on SME finance, entrepreneurship and competitiveness; she previously served as the Administrator of the US Small Business Administration; in her post on AltFi she discusses why London will remain a global leader in financial innovation despite uncertainty with Brexit. Source
The UK has triggered Article 50 and the 27 European Union countries will now begin negotiating with the UK for new terms; Innovate Finance's Lawrence Wintermeyer provides comments on the effects on fintech; says Brexit will make it more challenging for the UK to attract global investment and talent; Wintermeyer also says Brexit could potentially create new opportunities for regtech which will become increasingly important in cross-border activities. Source
The British High Court ruled on Thursday that Parliament must give its approval for Brexit, creating uncertainty on whether or not the UK will leave the European Union; plans for exiting the EU were to begin in March; the government now has appealed the High Court's decision to the Supreme Court which will consider the appeal in December; if the ruling is upheld speculators believe Parliament would continue with the same sentiment that its voters reported in June. Source
Stress testing from Funding Circle has reported its loan platform would still provide investors with a net return of 6.4% given a worst case market scenario; while effects from Brexit continue to be debated, market skeptics are not as optimistic as the UK platforms; they foresee stagflation in the UK characterized by higher unemployment and slowing GDP growth; they are also concerned about a lack of skin in the game which has prompted parliament member, Chris Philp, to request from the Financial Conduct Authority that a portion of each firm's loans include balance sheet capital; while marketplace lending executives are against this approach, policy makers are considering it. Source
The UK fintech sector has shaken off the worries of Brexit to take in the second highest amount of capital from VC’s in 2017; they have overtaken China and only trail the US in terms of VC funding; according to data from Innovate Finance UK fintech investment was up 153 percent in 2017 from the year earlier; 24 per cent went into challenger banks, 21 percent into money transfer and foreign exchange, 17 percent into alternative lending and financing and 11 percent into personal finance/wealth management; VC investment globally reached $14.4bn across 1,824 deals, representing an 18 per cent decrease from 2016. Source.
One of the more controversial items of the past year around the world has been the Brexit vote in the UK, and at LendIt USA 2017 we hosted a panel of leading platforms to discuss what the vote has meant for their companies thus far; consensus opinion throughout the panel was that the campaign leading up to Brexit had a worse effect than the actually vote; most investors these platforms work with wanted Brexit, so the vote of leaving the EU was not a surprise to many platforms; origination volumes have rebounded since the vote and both small business and consumer markets are currently strong in the UK; during the campaign for Brexit a lot of uncertainty was in the market but that uncertainty and bad news was short lived; markets rebounded, the bad news cycles slowed and UK MPL platforms continue to show strength in the post Brexit world. Source