Interviewees to WWL’s research into the banking market reported increased collaboration between banks and fintech firms again this year. They reported that, as “financial and data regulation continues to increase”, such as through the implementation of the EU Payments Services Directive (PSD2), the GDPR and the EBA guidelines, fintechs are choosing to collaborate with banks to obtain licensing and investment. In return, banks are leveraging fintechs to stay current in this disruptive industry. As a result, “start-ups are maturing and there is more balance in the market, with more varied work for practitioners in the area”, according to feedback.
The collaboration trend has contributed to the “increasing globalisation of the fintech market” according to one interviewee. In the UK however, Brexit concerns have cast some uncertainty over London’s current position as a hub in the fintech sector. One respondent noted, “Brexit will ultimately shift some focus away from the UK and towards mainland Europe,” and added that attention is especially likely to centre on “Berlin and Copenhagen, where there are a number of experts”. Moreover, post-Brexit passporting concerns have contributed to fintech companies’ attraction to mainland Europe.
On the other hand, “London is still the place to be for capital and liquidity access”, according to those we spoke to. In addition, on a domestic level there is also some promise for advancement within the North of England, especially via the community platform FinTech North – respondents hope this will further establish the UK’s stronghold in the market. Currently, however, there “needs to be more cooperation among Northern cities and less competing” for it to excel alongside London, respondents told us. In all, despite the economic uncertainty, it appears that the fintech market is still thriving domestically.
On an international level, interviewees are reporting fintech expansion into Africa, with numerous payment service and blockchain business models launching across the continent. The result has cumulated in increasing advisory work for practitioners, particularly on financial inclusivity regulations and other compliance matters.
Overall, the fintech market continues to disrupt the financial sector and flourish on a global scale, therefore creating more work for lawyers. This has ultimately resulted in an increasing number of law firms investing in fintech teams, as well as spin-offs and other initiatives for collaboration and investment, which will no doubt continue despite global economic uncertainty.