Is Brexit Big Banking’s Swan Song?

 

Trading has long been a part of human history and it is only natural that we figure out ways to make the process smoother for common business partners. In 1957 the European Economic Committee (EEC) was founded—the United Kingdom (UK) officially joined in 1973—and in 1993 the European Union (EU) was founded and absorbed the roles and responsibilities of the EEC. The goals of both of these collectives were to create easy trade routes and a sense of kinship between the contributing countries.

Was it a successful union? On June 23, 2016, a UK Referendum found that the majority of the country (52%) did not believe in the power of the EU and wanted to separate. Although the split has yet to happen (many are calling for a second referendum and both Scotland and Northern Ireland have voiced their intent to stay with the EU, as have the major cities London and Oxford) this action has far-reaching consequences and could lead to another devastating world recession.

Already the effects are being felt. After the results were announced on Friday the global financial market lost $2 trillion in value, Dow fell 650 points and the pound hit its lowest level in 31 years. At the moment, there is an overwhelming sense of panic in the market. Not only that, UK Prime Minister David Cameron, who campaigned against Brexit, announced he will step down in October, leaving the leadership of this suddenly unstable country up in the air.

Also unknown is what the further effects of the Brexit will be—both in terms of the UK, the European Union and the world market. After all, this original market crash is a result of the sudden imagined crack in the EU. The real test will come once the break becomes real and the market has to realign itself. What will happen to the world market once the rules change?

The UK was one of the EU’s great business centers and with the imminent separation Europe is losing its largest FinTech hub.  At the same time, the UK’s ability to sell and trade with the rest of Europe will now change. Without an EU passport, it is likely that the British businesses will have a much harder time operating in that capital market. They can, as many US Big Banks are doing, choose to establish new headquarters elsewhere in the EU, but it is unknown whether they can successfully make that transition. Will EU members be as willing to conduct business with a country that chose to leave the fold? (Also yet to be seen is whether the Brexit will lead to other countries following suit, leading to a weaker or changed European Union trading market. As of now, Austria, Finland, France, Hungary, Spain and the Netherlands all appear to be considering the option.)

However, these realities and the imminent changes illustrate the potential there is for true FinTech growth in the UK. The new world economy will need a technologically-enhanced financial system and this is where FinTech will flourish. Already ahead in the game, the UK FinTech companies—especially those working with distributed ledger technology—and companies aligned with FinTech are the ones that will rise to the top of the new international market. By making a firm imprint in a growing field, the UK will continue to thrive even in the coming chaos. Watch for it, as the ever-growing FinTech market will be the calming factor in an uncertain UK investment field. Leadervest will definitely be watching, as we believe in Investing in Others and the FinTech market is the perfect place to find the ideal opportunity to embrace and take on.

 

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Welcome to the Leadervest experience. Founded after the 2008 Global Financial Crisis, we are Financial Services & FinTech specialists helping startups increase sales through sales & marketing consulting and believe in Investing in Others for more Responsible Leadership in Financial Services and FinTech.‎ We specialize in mobile payments/eCommerce, wealth/portfolio management robo-advisors, online lending, digital currency exchange, blockchain, big data & analytics, crowdfunding and insurance. Connect with us at Leadervest.com.