British financial technology companies are worried that Brexit is causing a shortage of software engineers and pushing up salaries in the sector, prompting some of them to open offices elsewhere in the EU, reports the Financial Times.
Mike Laven, chief executive of Currencycloud, said that the UK-based payments company was planning to open an office in another EU city — probably Amsterdam — because of fears that recruitment problems in London could hamper its growth.
The loss of London’s allure for young European software coders could threaten the government’s ambition to maintain the UK’s position as the continent’s dominant hub for the fast-growing fintech sector after Brexit.
“We think the market for engineers has tightened and I think engineering salaries are going up. I think we are seeing not so much people leaving but not the influx that we had before . . . I think that is a threat to the industry.
“We need a massive amount of engineering talent on a global basis,” said the head of Currencycloud, which provides cross-border payments services to other businesses, including many fintechs. “If we can’t have all those jobs based here, then we will actually have to put those jobs someplace else,” Laven said.
He said the evidence of rising salaries for software engineers was so far “anecdotal and by the time we have the real data it will be too late”, while adding: “I’ve shared that with a couple of other people and they find the same thing.”
While many banks are worried about the regulatory aspect of Brexit, the biggest concern for many fintechs is that their access to skilled workers from Europe will be reduced if immigration is restricted after the UK leaves the EU in March 2019.
“It is just a people thing. I think on the regulatory side we will figure it out,” said Laven.
“We understand passporting, regulation and compliance and it will cost us money, but we will sort that out. To me, the London fintech issue is more around having the right people and having very easy access to that,” he added.
To me, the London fintech issue is more around having the right people and having very easy access to that.
Michael Kent, founder and chief executive of digital payments provider Azimo, told the FT recently: “My big problem is that a lot of young people who are tech workers don’t actually want to live in the UK any more, so we have got people drifting towards places like Berlin, places like Barcelona, places like Lisbon.
“There are not an awful lot of reasons if you are a young tech millennial to be in London with the exception of it is where the work is, and if the work drifts away you might see quite a big impact,” said Mr Kent, adding that Azimo was assessing various cities to create a new EU hub.
Last year, TheCityUK lobby group called on the government to introduce a new “digital skills visa” to shore up the UK’s position as a fintech hub against a growing threat from rival cities. The government has promised a special post-Brexit travel regime for bankers and other professionals, but details are hazy and it is unclear if it will include fintechs.
There have also been worries that the Brexit vote could hit investor confidence in the UK’s nascent fintech sector and cause funding to dry up for some start-ups. But those fears have so far failed to materialise. British fintechs raised $1.8bn of venture capital investment last year, up more than 150 per cent from 2016, according to Innovate Finance, the UK fintech trade body.
“I do not think it actually takes away from London,” said Anne Boden, founder of digital lender Starling Bank, adding: “It is sad, and I think London will be threatened, but London will survive.” She said that Starling had “already passported into Ireland” and may need to do more of its business from Dublin because of Brexit.
Several of the UK’s other leading fintech companies have also warned they will need to open an alternative EU office because of Brexit, including TransferWise.
Last month, Chancellor Philip Hammond announced several measures to ensure the UK remained “the best place in the world” for fintech companies, including appointing fintech envoys for England, Northern Ireland and Wales and boosting funding for the British Business Bank.
