The Brexit Isn’t Stopping FinTech Investment and Sector Growth
With over 12,000 companies getting involved, the FinTech industry is one the rising industries across the globe. According to PwC, the estimated global investment will surpass $150 billion USD in the fintech sector in the next 3-5 years. The FinTech industry works to integrate the financial world with the technological world to modernized the way financial services are provided. The US and Europe are at the forefront of the revolution.
In 2014 Europe alone saw investment in FinTech more than double per a recent report by Accenture. In Europe the war is mainly between the two giants, Berlin and London who are always competing to attract investors. In 2014 German FinTech ventures grew an astounding 843% and in 2015, Berlin attracted 2.15 billion euros as compared to London’s 1.77 billion.
Recently the UK decided to exit the European Union, ending over 40 years’ of association. The implications of the exit on UK, commonly known as Brexit, will take almost 2 years to settle in terms of new agreements on trade, labour and financial activities with the EU.
The implications of the Brexit on EU companies will be both financial as well as regulatory and the Bay Area FinTech staffing sector will be no different. US FinTech is a huge sector with 38 firms topping a whopping $50 million in 2015 as compared to only one in Europe. Thanks to the Brexit, the US FinTech industry will likely become financially stronger as the US will have more venture capital investments as compared to the split EU now and they could enter a mega round of investments worth a whopping $50 million. But the real problem posed for the US companies including the FinTech sector is the legal implications of Brexit.
The US and its companies will now have to cope with the EU and UK separately and address their legal issues separately. For example, recently the EU and US signed a Privacy Shield agreement which was to come in effect from the 1st of August 2016, imposing heavier obligations on US firms to protect the personal data of EU nationals. Now because of Brexit, UK and US will have to come to a new agreement regarding protection of personal data.
Generally, the US did not support the Brexit and, according to Dan Crowley, Public Policy Partner at K&L Gates LLP (Washington DC), many Wall Street banks were funding aiding in the funding of the Remain in EU campaign in London simply because of the stringent new regulations that would be needed in place for UK and Brussels in response to the Brexit.
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