10 Newbies ain’t scared of no Brexit
by Brexit fears, according to PwC research. 9 in 10 of the PwC ‘s Authorisation and Startup Unit’s clients that were planning to set up a new FS firm before the UK vote to leave the EU are still committed to this.
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Stephen Morse, Financial Services Partner at PwC, says the company is working with approximately 20 prospective new banks and other large FS businesses looking to be based in the UK. They are a mixture of domestic UK businesses, EU-based individuals and businesses and those from the likes of China, Turkey, Japan, South Africa, Asia and the Americas.
“What is striking is the variety of new businesses that are applying for UK licences is not just limited to “mainstream” retail challenger banks, mortgage lenders and asset managers. There are a range of new technology-enabled banks, FinTech businesses, commercial banks and even niche investment banks who have identified gaps in the market in part caused by big global banks having pulled out of some businesses over the past few years,” he says.
Key factors here are a widely held view that the UK is a market which embraces innovation and that has a progressive regulatory regime, a well-established and sophisticated financial system allied to a highly skilled and experienced workforce.
hallenger banks and FinTechs are unfazed
There remains a wide range of potential investors and backers for these new market entrants, from a variety of EU and non-EU countries, not only from the more traditional type of equity investor, but also from new investors who are looking at providing debt funding. PwC has estimated that the total capital already committed exceeds £200 million, with total capital and funding of approximately half a billion pounds featuring in their clients’ business plans.
According to Darren Meek, London Financial Services Leader, the costs, complexity and significant time previously associated with setting up a new financial services business (in particular a UK-based bank) have reduced by well over half during the past two years. This is expected to remain flat or reduce even further, as technological innovation continues and new entrants look for increased cost efficiencies for example, by using managed service models.
“Depending on the type of business, it is entirely possible to go from having that great idea to day one trading in a matter of months, rather than years. This can be attributed to a combination of factors,” he says. “Developments in technology, a business-friendly approach from the regulators, and everyone drawing on the experience gained from previous business startup projects.”
Scott Thompson
www.ibsintelligence.com © IBS Intelligence 2016
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