Interesting piece in the Daily Telegraph talking up the role of UK Fintech start-ups post Brexit. John Collison an Irish Entrepreneur and co-founder of Stripe a company in the payments business whose value is somewhere around the $ 100 billion level makes some interesting comments for those considering an entry to the booming London Fintech sector. Describing the last five years as being” crazy and impressive” he foresees that even after Brexit the UK domestic market driven by London will be large enough to provide a template for businesses which can then expand internationally. Perhaps most relevant is the fact that London’s Fintech sector is perceived to be ahead of its US counterparts as it provides the base for banking, political and technology in one place. By contrast Silicon Valley is in California while the banking centre is in New York and the political centre is in Washington an hour’s flight away. Certainly there has been heavy American investment in the London Fintech sector with or without a trade deal.
Of course everyone and his brother wants to get involved in the great post Brexit infrastructure party and the UK government through the treasury is planning to establish a a bank to do just that. This is partly due to the fact that Britain’s projects will no longer have unrestricted access to the European investment Bank. On this venture I am somewhat cynical. Presumably one of the objectives of this exercise is to attract private sponsors and I am afraid that this might not be a very good way of doing things. One of my concerns is that anything in which the government is involved has political connotations. When government gets involved common sense flies out of the window. HS2 is a great example of how not to manage a project with Crossrail coming a close second. Both projects show the same lazy characteristics which all government projects from building frigates to bridges show. There is no financial incentive to demonstrate why the project should go ahead in the first place. When the whole thing is complete whatever it is, it is over budget, probably obsolete and will leave nobody happy and nobody is accountable. The government does not have the money to rely on vanity projects yet it doesn’t know how to justify these things in any other way. The project management and financial structuring skills have disappeared from the banking world just when they are needed most.
The Daily Mail is not my usual source for financial stories but Ross Clark is writing about a subject which is in essence critical to everybody and looks like it needs to be taken a whole lot more seriously. Payment fraud. He points out that since the beginning of Covid lockdown bank customers have lost £ 1.4 billion through online frauds a significant increase year on year. Several large banks are allegedly trying to circle the wagons and make it clear that they are not going to be held responsible and that the poor client will have to foot the bill. This would be unacceptable at the best of times but electronic transfers are not new and both the established banks and the regulators both domestically and internationally should have done better. There is an opportunity here for the Fintech community if they can only grasp it.
Howard Tolman is a well-known banker, technologist and entrepreneur in London,
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