Brexit regulatory freedoms set to make London a fintech and data sandbox

London has led the innovation of financial technology for many years.

Vast in-house teams of systems developers within Tier 1 banks, non-bank market makers, professional services consultancies and hosting and order routing companies in the Square Mile nestle alongside the startups of Shoreditch, meaning that pretty much every global trade, and every modern method of using a financial services platform globally has strong links with London.

This week, as the United Kingdom finally frees itself from the political and economic burden of being a member of the European Union, hopes of further refining London’s mettle as a center of innovation for the financial services sector are in the forefront of the minds of many executives within the industry.

Rather oddly, although London is the center of excellence for the electronic financial services industry at institutional and retail level, the government of the United Kingdom has displayed utter incompetence over a very long period of time, demonstrating that London’s financial industry is almost a separate economy from the mainstream British economy outside of the Square Mile.

Incumbent Chancellor of the Exchequer Rishi Sunak, is himself an economic incompetent, having blown an absolute fortune on absurd schemes bordering on socialist methodologies to keep the public from rioting over the country’s continual lockdowns, and often features himself wearing a laboratory coat and clutching a needle whilst smiling for the camera in mainstream tabloid press in  a similar methodology to propaganda efforts of totalitarian dictators.

Someone to trust, he is not.

However he does have the benefit of the British economy being continually elevated by the efforts of the 0,0009% of the British workforce which works in London’s financial sector whose efforts and expertise is so tremendous that it contributes to over 16% of the European Union’s tax receipts from this relatively tiny number of professionals.

Hence, Mr Sunak has to admit that “Now that we’ve left the European Union, we can do things a bit differently. We’re embarking on that journey, for example examining how we can make the City of London the most attractive place to list new companies anywhere in the world.”

Some believe that the regulatory freedoms allowed by the UK’s departure may allow the City to become a sandbox for new approaches on fintech and data use.

It has been clear for many years that bureaucracy foist upon Britain by the left-wing European Union was always an obstacle that firms in all business sectors have had to navigate around, however with a self-determining City of London about to unleash its tremendous prowess without such red tape, hopes are high.

On December 26, a respected annual report said the UK was set to remain the world’s fifth largest economy for some time and that it would race ahead of France in the decade to come.

Douglas McWilliams, Deputy Chair of the CEBR, who compiled the report, pointed to the UK’s strengths in digital and creative services as evidence of the country’s future-proofed economy.

“We have a huge competitive advantage in this tech-based sector which the current situation has kicked forward. Most of this is pretty Brexit-proof provided the UK continues to attract talented people,” he said.

Certainly the talent base is vital, and London keeps attracting the world’s talent base which strengthens not only the City’s abilities but also its relationships with financial sector entities globally as former senior employees in finance from all around the world move to London.

In terms of breaking free of European regulatory red tape, London is able to provide its own innovative methods of providing technology for the world’s regulatory structure which could shape the financial sector in future.

Regulators in regions with significant and dominant financial markets industries are keen to see more technology adoption in compliance, with automation, machine learning and artificial intelligence (AI) advances likely to cut through cumbersome and paper-intensive reporting processes, a matter that FinanceFeeds has researched in detail recently.

Colloquially known as “regtech,” a growing number of solutions have emerged, and look set to reduce costs, compliance headcount and reporting time.

Three years ago FinanceFeeds spoke to a senior government minister who is responsible for encouraging FinTech advancement in the United Kingdom.

To gain a perspective on this from a governmental point of view, FinanceFeeds spoke to Adam Afriye, Conservative MP for Windsor, who was a member of the Science and Technology select committee from 2005 until its abolition in July 2007, has been the President of the Conservative Technology Forum and Chair of the Parliamentary Office of Science and Technology since 2010.

Mr. Afriyie is also Chairman of Connect Support Services, an IT support company he set up in 1993. He owned two-thirds of DeHavilland, a political monitoring company, which was sold to publishers Emap in 2005 for £18 million. He was also a regional finalist in the 2003 Ernst and Young Entrepreneur of the year awards. He was a Governor of the Museum of London, a trustee of the Museum in Docklands and a director of Policy Exchange, a centre-right policy body.

Additionally, Mr Afriyie is a stakeholder of Axonn Media, a content marketing business which produces content for clients. The company incorporates brands such as Content Plus, NewsReach, DirectNews and ReelContent. Axonn turned over £9.4m in 2011 and made a pre-tax profit of £1.3m.

He is also the largest shareholder of the firm and he and his fellow directors split dividends of £2.2m in 2010 and 2011 and shared directors’ pay of £3.6m over the last five years.

This morning here in London, Mr Afriyie explained to FinanceFeeds ““London’s status as the global centre for Financial Technology did not come about by accident but rather due to the positive and supportive actions of British legislators, regulators and financial firms.”

“That’s why as the Chair of the All Party Parliamentary Group on Financial Technology I was so pleased to hear the FCA explicitly highlight RegTech throughout the whole of last year as a sector where they are committed to playing an active role in fostering innovation” – Adam Afriyie, Conservative MP

“More can be done to stimulate advances in the RegTech sector. The FCA’s Call for Input from July last year highlighted the pro-active, but limited, role that they can support the sector, in particular aiding the industry in defining standards and guidance. However, the FCA are also receptive to the role that Government cannot play, such as building one-size fits all regulatory solutions to an area with a great diversity in complex legacy infrastructure.”

“It is reassuring that we have a Government that recognises technology is the key to our continued economic vibrancy and that seeks to nurture and adapt to disruptive new technologies through the Industrial Strategy rather than try and stifle them” he concluded.

In Britain, it is certainly not only the financial sector that leads the technological drive into the future, but also the official regulators, backed by astute members of central government, especially experts like Mr Afriyie who actually does something valuable rather than pose as a medical doctor and smile for the camera like no-mark propagandist Mr Sunak.

Who would you rather was in a senior government position? The chairman of an IT support company that serves the financial sector, or a Brussels based socialist who is a card carrying member of a workers union?