Brexit cloud hangs heavy over UK fintechs
There’s no irony lost in the potential that the home of one of the world’s most internationally integrated cities risks having its doors closed as the result of this week’s British referendum on EU membership.
Among large financial technology providers, US vendor ACI sounded the alarm bells last week, with its warning of impending doom in the event of a Brexit vote. In a campaign that has been marked by a light grasp of the truth, on both sides of the debate, however conversations with some of the UK’s brightest fintech start-up companies have revealed deep-seated fears that reflect the scale of the decision the UK will take on Thursday this week.
A straw poll of start-ups at Barclays’ Rise accelerator in the east of London revealed the breadth of concerns among the country’s new breed of entrepreneurs, ranging from access to talent, to pricing and the viability of their business model should the country decide to leave the economic bloc.
For early stage, bootstrapped companies – often still refining their business models and without the time or resources for feasibility studies or impact assessment in preparation for Thursday’s vote their responses should be a wake-up call to anyone that has not yet made up their mind. A snapshot of their replies is included below.
Freddy Macnamara, CEO of Cuvva, a start-up offering hourly car insurance, on whether the arguments around the potential impact of a leave vote are over-stated:
“For companies like ours, a decision that could reduce or restrict our access to the single market will have a profound, direct impact. Restrictions on access to the consumer marketplace would make it harder to build the case for our business, restrictions on access to hire people from other countries would increase the cost of our operations which would question the viability of our business.”
Some might feel that paying higher wages would be a welcome outcome of a decision to leave?
“London’s success in building an early stage start-up ecosystem is wholly reliant on access to people and talent from across the EU. I really do think that whole success story – potentially the brightest spot in the UK economy would be put at risk by a vote to leave.”
What does being part of the single market mean to Cuvva?
“We want to be in as many countries as possible and take advantage of the potential for a truly crossborder insurance market. To achieve this, we will want to work with underwriters across Europe. Depending on what happens this week if we can’t make it work in London we will look for other ‘low-friction’ jurisdictions – Berlin might be an option. “
Mutaz Qubbaj, CEO of Squirrel, which offers financial wellbeing solutions for corporate employees, comments on how UK membership of the EU has contributed to early successes.
“Half of my team comes from outside the UK. The seamless access to talent and resources afforded by being part of the EU should not be overlooked. Not to mention the threat of international corporates and banks – partners and customers to Squirrel and a host of other businesses alike – moving their operations out of London.