Fintechs Optimistic About International Expansion Despite Brexit and Covid Fears
- FinTech StartUps
- 08.09.2020 03:38 pm
Global expansion specialists Newfound, has revealed that the economic fallout from Brexit and the Covid-19 pandemic is making fintechs more cautious about international expansion, according to a survey of 50 fintech executives. Despite these fears, the majority of fintechs plan to expand internationally in the next 18 months citing diversifying revenue streams, access to talent, and “winning” strategic hubs as key drivers.
“The fintech industry was forged in the 2008 financial crisis, and it is no surprise that the sector is resilient and optimistic in the wake of macroeconomic events like Brexit and Covid,” said Peter Gillingwater, CEO, Newfound. “It is promising to see so many firms are looking to expand over the next 18 months. The sector is emerging strong after a turbulent year which bodes well for the European fintech market. However, growth may be slower than pre-pandemic levels and fintechs are asking for more support from the government and industry to give them the best chance of success.”
- Brexit and Covid-19 pandemic may slow fintech expansion: With the transition period coming to an end on the 31st of December 2020, fintech executives are apprehensive about Brexit uncertainty. 50% said they would be sceptical to set up a base in the UK because of Brexit. More widely, fintech executives cite lack of access to talent (80%), limited availability of funding (80%) and the macroeconomic situation caused by Covid (60%) as the biggest inhibitors of market expansion.
- Despite fears, fintechs are set on international expansion: 68% of fintech executives expect to expand into new markets in the next 18 months, with nearly one third “ready to expand now and actively seeking growth opportunities”. In fact, just 2% said they wouldn’t expand anytime soon. And more than a quarter (26%) are looking to launch in new markets next year. Looking at fintech expansion to the UK, 52% of executives expect growth to be “modest” with a gradual increase over the next 12 months. Only 10% predicted a fall in firms expanding to Europe’s biggest fintech market.
- Talent is a key driver for fintech expansion to the UK: Access to talent is the #1 reason for those looking to expand to the UK specifically. As such, programmes that aim to attract new tech workers to the UK - such as the Tech Nation visa programme - are critically important. With more than a third of employees at UK fintechs coming from overseas, it is critical that public/private partnerships – especially with Brexit on the horizon - continue to ensure firms have access to the talent they need.
- Fintechs need more guidance and support: Aside from access to talent, fintechs would like the UK government to do more to help fintechs expand and attract fintech firms to the UK. Two-thirds of fintechs (66%) said that the government could do more to support international firms. And 42% said that tax breaks and support programmes that make it easier to plan expansion, could help make the UK a more attractive destination for global fintechs.
Newfound’s virtual trade mission runs from September 14th to September 24th. It is geared to international fintechs looking to scale in the UK. It will provide firms with UK market knowledge and connections for expansion. More details can be found here: http://www.newfound.global/programmes/market-missions/uk-market-mission-sep-14th-24th.