UK fintech could face a Brexit staffing shortage
The UK (or more accurately, London) is often regarded as a world-leading hub for fintech innovation.
According to KPMG, the country attracted fintech more investment than the US and China in the first half of 2018, driven by the £9.1 billion (US$12 billion) takeover of British payments processor Worldpay.
Innovation in financial technology has flourished as a result of the market’s established finance expertise, regulations that support open banking, and a consumer shift away from incumbent banks in favor of disruptive challengers such as Monzo, Revolut and Starling Bank.
With a no deal Brexit increasingly likely, however, financial service organizations are concerned about a shrinking talent pool of the best graduates.
A recent LinkedIn Workforce report surveyed 600 hiring and recruitment managers in the UK and found that up to 20 percent of graduates with the required tech skills in the sector are from countries in the European Union. The report highlighted that since the Brexit vote in June 2016, there has been a significant decrease of graduates coming to the UK from France and Germany in particular.
More worryingly, those survey revealed that since the Brexit vote, UK recruiters and hiring managers have seen a net migration of tech graduates back to the EU. The risk is that those skilled migrants will leave the UK before they can be replaced by home-grown talent, which could put a chokehold on the growth on the fintech sector.
As such, a report from the TheCityUK said the fintech industry— which employs 60,000 people and is worth US$9.3 billion to the UK’s economy— must work harder to secure the skills they need.
“Since the Brexit vote in June 2016, there has been a significant decrease of graduates coming to the UK from France and Germany in particular,” said TheCityUK chief executive, Miles Celic.
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 possibility of workforces losing their passporting rights has seen 275 UK financial institutions moving their operations to the EU, with Ireland being the biggest beneficiary of this shift. UK-based challenger Starling Bank, for example, has applied for an Irish banking license as it readies to launch in the country later this year, with plans to use Dublin as a hub to launch into other European markets, such as France and Germany.
However, the TheCityUK report suggests there is no cause to panic just yet. Even without a deal and loss of passporting rights, London will likely maintain its status as a global fintech hub— if it loses ground in Europe. The UK capital’s strong financial foundations, and factors such as infrastructure, capital, regulation and favorable taxation, will maintain their positive influence.
To help counter the effects of a loss of talent from Europe, the report recommends financial services and tech companies look to create lasting partnerships with universities to reach skilled individuals and ramp up training of existing staff.
Ultimately, fintech and financial institutions need to be honest with their customers amidst all the controversy swirling around Brexit. Openly discussing their views on how things could change post-Brexit could go a long way in mitigating any client concerns amid the Brexit uncertainty.