21 Apr

'Brexit emboldens London fintech start-ups' James Eyers, AFR

Brexit has emboldened leaders of Britain's financial technology sector to ramp up efforts to attract entrepreneurs to London, where a falling corporate tax rate and deep pools of capital and talent have created a thriving ecosystem that Australian governments wish to replicate.

The day after UK Prime Minister Teresa May called a surprise election for June 8, a delegation of Australian fintech start-ups, investors and government officials, arranged by the Australian British Chamber of Commerce, arrived in London for three days of briefings on UK fintech policy settings.

Even though Brexit has created waves of uncertainty for business and a distraction for the UK government, an adviser to the City of London told the delegation the UK corporate tax rate of 20 per cent, which will drop to 17 per cent in 2020, along with generous research and development tax concessions and visa schemes are being used to lure talent to the UK. The country has 46,000 digital technology businesses that employ 240,000 people.

Despite Brexit, "day-to-day business is continuing as normal and we are carrying on as usual", said Catherine Thomas, business development manager at London & Partners, which is funded by the Mayor of London Sadiq Khan to attract business to the capital. "Fintech is an area we are targeting," she said.

James Clark, the business development manager for technology at the London Stock Exchange, said the equity market recovered after last year's Brexit referendum as investors bid up some recent technology floats. "For early stage start-ups seeking up to £10 million ($17.1 million), the IPO [initial public offering] is a source of growth capital in the UK," he said.

UK fintech companies made £6.6 billion of revenue and attracted £524 million of investment in 2015, according to EY, a sponsor of the British Australian Fintech Forum this week.

As Prime Minister Malcolm Turnbull moved to tighten Australia's 457 visa scheme this week to the chagrin of some technology sector leaders, Andrew Corbett-Jones, the head of Tyro's fintech hub in Sydney, who is also advising the UK government, said the UK's Tech Nation and entrepreneurial visa schemes would continue to allow London start-ups to hire the technology talent they need. Ms Thomas said salaries for IT developers are slightly lower in London than they are in Sydney.

Ben Brabyn, the head of Level39, a fintech hub housing 200 start-ups employing more than 1000 people, told the delegation one-third of its residents came from outside the UK. They are attracted to the Canary Wharf location because 30 per cent of the global investment banking industry's IT budget decision-makers reside within a five-minute walk from Level39, he said. "The titans of finance are facing an existential threat. They need encouragement to jump, and this is where they should jump to."


Gene Vayngrib, the co-founder and CEO of London-based Tradle, which is using blockchain to streamline know-your-client procedures and is expanding to Australia, said Australia's new "regulatory sandbox", which has been created by the Australian Securities and Investments Commission to create a lighter touch regulatory environment, appeared more restrictive than a similar scheme set up by the UK's Financial Conduct Authority. After meeting with ASIC during a UK fintech trade delegation to Australia in March, Mr Vayngrib said ASIC's "process today is too rigid – and that needs to change".

ASIC chairman Greg Medcraft is in London and will address the delegation on Thursday. There will also be briefings on UK policies towards opening up financial data and creating start-up banks to foster competition, moves under consideration in Australia.

Australian politicians say they recognise the need for policy settings to attract technology talent. At a reception for the group at Australia House on Wednesday night, NSW MP Gareth Ward said the state government "is committed to supporting our fintech sector and is actively encouraging the growth of ecosystems right across the board".

"We are working to position Sydney as a leading Asia Pacific fintech hub, with key strengths in blockchain, peer-to-peer, wealth management, wearables, big data and payments," he said. "Australia's state, political and regulatory environment make it one of the easiest countries in the world in order to conduct business."

Read more: http://www.afr.com/business/banking-and-finance/financial-services/brexit-emboldens-london-fintech-startups-20170420-gvony3#ixzz4epjMXLyY 
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Posted in General by hmaclean@britishchamber.com

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