So we finished the Financial Services Club season with a discussion of the implications of Brexit on the City of London and Fintech London, with a panel debate amongst four stellar people:
- Sharon Bowles, former MEP and now Baroness Bowles of Berkhamsted;
- Lawrence Wintermeyer, CEO, Innovate Finance;
- Jeremy Light, Managing Director, Accenture Payment Services; and
- Gijs Boudewijn, Chair Payment Systems Committee at The European Banking Federation.
There’s not a great deal I can report, as the situation is clearly unclear. We have no idea when Article 50 will be triggered that begins the two year exit process; we have no idea if it’s a hard or soft Brexit or, as some are calling it, a black, white, grey or purple one; we have no idea what will happen from a European view; and we have no idea how the negotiations will conclude. Some believe it will be a protracted and lengthy debate and discussion; whilst others think it’s going to be a short and focused discussion, led by the British.
One of the comments that I found intriguing is that the Eurocrats are seriously worried about London becoming an offshore financial centre servicing the Eurozone and EU markets. Seriously? Could that be the outcome? I guess so, as London has over a million people working in finance and technology – which other centre has that mass of talent? And if that talent is split, where does it go? Wealth management to Luxembourg? Investment banking to Frankfurt? Financial servicing and administration to Dublin?
A fragmented financial market is not desirable, so we really have a dilemma here. The EU needs an English-speaking financial market platform to attract overseas firms to our markets, whilst they don’t want the financial market focus to be outside the European Union.
A lot of discussion is now about a fudge. We leave the EU and pay to maintain access. That’s what our lead negotiators are discussing now, and there is the idea of a transition period which would be to help maintain EU stability and the financial markets. The problem with that is that a transition period could go on for years. In fact, it might be never-ending.
Meanwhile, back in our debate, the feeling was that there wouldn’t be a huge amount of impact on Fintech, except maybe in the payments and neobanks area if we lose passporting, and the City would still remain as important as ever. After all, a lot of things are in its favour, as I recently blogged.
Perhaps the case of the merger of the Deutsche Bourse and London Stock Exchange will be the real test case here, as the European Commission looks set to approve the move, as long as they can sort out derivatives clearing questions.
All in all, I get the sense from our various debates and the media that Brexit might not be as bad as we all first thought, at the end of the day. Europe has core issues – as evidenced by the rejection of the Italian plan and the rise of Marine Le Pen – as has the world – as evidenced by the election of Donald Trump. Is it the case that we need more local leadership than global, or is it more the case that the general person on the street is just totally hacked off with the politicians?
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...