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BREXIT: Challenger banks and fintechs not deterred from UK launch following Brexit vote, says PwC


Challenger banks and financial technology start-ups have not been put off pursuing their plans to launch in the UK market in wake of the country's vote to leave the EU, according to consultancy firm PwC.

This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.

PwC said 90% of financial firms it is helping to get established are "still committed to setting up their businesses in the UK". The company said it anticipates "continued growth" in the number of new firms seeking to enter the UK financial services markets.

"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," Stephen Morse of PwC said. "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."

"This positive sentiment can be put down to a combination of key factors: a widely held view that the UK is a market which embraces innovation that has a progressive regulatory regime, a well-established and sophisticated financial system allied to a highly skilled and experienced workforce," he said.

PwC said that there also remains appetite for investment in UK financial start-ups.

"Potential investors remain willing to look carefully at well thought through and presented market analyses, business plans and projected returns," said Andrew Kail, UK head of financial services at PwC. "However there remains a real emphasis on high-quality applicants, and a clear focus on having the right strategy for negotiating price and terms with potential investors and backers." 

Yvonne Dunn and Luke Scanlon, experts in financial services and technology at Pinsent Masons, the law firm behind Out-Law.com, said fintech companies should push for 'business as usual' regulation in the short term and be optimistic about the approach UK regulators will take to support innovation further into the future in light of the UK's vote to leave the EU.

They said Brexit might provide the UK with opportunities to take the lead on a new global passporting framework in financial services and to adopt supportive policies on issues such as cloud-based outsourcing.

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