A recent report by KPMG suggests that Fintech startups are preferring Dublin to London as the uncertainty looms over the terms on which the UK will effectively leave the EU. Following a 2016 referendum vote in which the British voted to leave the 28 nations block, talks are underway to come up with the modalities for the actual exit of the UK.
The KPMG report comes at a time when Barclays has confirmed having set up a new base in Dublin in a bid to cement its presence in Ireland ahead of Brexit. As part of this strategy, the bank has confirmed that it has secured a 20-year lease with Green REIT at its One Molesworth Street development. This follows a last month’s announcement by the bank that it would be ramping up its presence in Ireland. The development is expected to be complete by the end of the year but it is not clear when Barclays intends to move in. The Bank is expected to take up more than half of the space in the building. Green REIT confirmed that the rest of the space will be occupied by other tenants.
In January, it emerged that Barclays had settled on Dublin to serve UK-based finance companies if they lose easy access to the rest of Europe. It is suggested that Barclays staff moved to or hired in Dublin could include senior managers, currency traders, derivative specialists, compliance and human resource staff. These are expected to join 100 staff already working in Ireland. The report notes that unlike other financial institutions, fintech startups are taking a little more time to make a decision to relocate from the UK. However, it should not come as a surprise if many of them decide to relocate to Dublin as their decisions will greatly be influenced by the actual terms on which Britain will ultimately leave the Union.
Global fintech funding doubled in the second quarter of 2017 to exceed $9.26 billion. in Europe alone, fintech funding stood at $2.61 billion over the same period, out of which, $230 million was invested in Ireland. Significantly, $28 million of this investment came from Swiss Privée, an international investor.
Anna Scally, head of technology at KPMG observes that with the prospects of hard Brexit becoming more real, more financial services companies based in London are looking for alternative locations and Ireland is high on the list of alternatives. She further notes that while regulators are pushing major financial institutions to come up with plan B, fintech startups have not had to be as quick to make decisions. She, however, predicts that you will start seeing fintechs increasingly examining their options in the next six months.
In the second quarter of 2017, the greatest beneficiaries of fintech investments were Europe and the U.S., each of which received $2.61 billion worth of investments. Asia settled for $760 million of fintech investment over the same period.