Innovative Finance, the UK’s fintech trade body, has reported that funding for UK companies has declined by a third in comparison with the levels seen in 2015. Innovative Finance blamed the Brexit vote for the decline, as UK companies struggle to compete with investment by China in the fintech market. The Financial Times reports that in the first half of 2016, Chinese fintech companies for the first time ever received more venture capital funding than their US competitors, largely due to a $4.5bn investment in in Chinese company Alipay.
London has historically been the fintech capital of the world, with both start-ups and established companies moving to the city to lower the costs of wealth management and money transfers. Whilst fintech companies currently still have access to European banks, the uncertainty created by the Brexit vote and concerns over how the banking industry will continue to fare in London, could lead some fintech companies to consider a move outside of London.
To counter the risk of this, Innovative Finance, has urged the Government to take measures to protect the industry, including recognising fintech companies as eligible for tax-efficient investors, and increasing the awareness of the “tech nation visa”, a visa which allows potential employees to work in London.
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