Six Questions with the Lord Mayor of the City of London

London is clearly the hub of FinTech innovation in Europe. While the dollars invested in FinTech firms are growing in both France and Germany, the dollars going to FinTech startups in the UK are still leagues ahead.

London also remains the place to go to raise later rounds of venture capital. Average deal size is $11.4 million in the UK versus $2.7 million in France, according to CB Insights. TransferWise and Funding Circle are both London-based FinTech unicorns (firms valued at over $1 billion), and London-based Anthemis is one of the most active early-stage investors focused on FinTech.

And yet, despite these numbers, the specter of Brexit hangs over every discussion of London’s FinTech ecosystem. We still don’t know what Brexit will look like for financial services firms, but some have begun moving parts of their operations to other EU countries, with Dublin, Paris, Amsterdam, and Frankfurt benefitting. While no one expects financial firms to leave the UK en masse,it is already clear they are adjusting their corporate footprints in order to continue to benefit from the single market. And some business activities, such as clearing euro-denominated derivatives, may be forced to decamp to the continent entirely.

I was struck at a recent UK FinTech conference by the number of speakers who appear to be whistling past the graveyard. For more information, I turned to Charles Bowman, Lord Mayor of London, an ambassador for the “Square Mile” where much of the UK’s financial sector is located, as well as the wider financial services sector in the UK.

 Charles Bowman, Lord Mayor of the City of London

Q.   Lord Mayor, what role do you play in promoting London’s entrepreneurs to the world?

A.   One of the UK’s main strengths, among many, is the world-leading talent and entrepreneurialism based in London and across the country.

The Square Mile is known for its iconic skyscrapers and is home to many of the world’s largest financial institutions. But what many people don’t know is that 99% of the City’s businesses are small to medium sized enterprises (SMEs) – many of which are FinTechs. Innovation and entrepreneurialism truly lie at the City’s core.

As Lord Mayor, I act as a key spokesperson and Ambassador for UK financial-professional services, travelling to nearly 30 countries over 100 plus days throughout the mayoral year. Whilst abroad I meet with leading financial figures from around the world and connect them with British firms through my international business delegations.

The purpose? To see where we can identify and strengthen our international links.

It’s always reassuring to see the positive reception these business delegates receive. Their world-leading ideas, coupled with their ability to cater to new markets, means our entrepreneurs are continually securing new relationships as a result of joining the mayoral international engagement programme.

Q.   And how are you promoting London to entrepreneurs elsewhere? Do you expect international entrepreneurs will continue to locate their startups here after Brexit?

A.   London is the world-leading global financial hub.

My international visits provide an opportunity to reiterate the UK’s strengths in both established and emerging markets – from the US and Japan to India and Brazil.

The UK’s strengths include fundamentals such as our rule-of-law, language, time-zone, investment capital, right-touch regulation and the infrastructure needed to grow and nurture a business – right from inception to becoming an established market-leader.

There are all qualities which make the UK so successful and they will not change as a result of Brexit. The UK will always remain an attractive place for entrepreneurs and businesses – particularly FinTechs – to start, grow and expand their firms.

Q.   What role does the City Corporation play in making London an innovation hub? Is it primarily a promotional role or is it also policy? If policy, can you highlight a few things the Corporation has done that have helped make it a leading hub of FinTech innovation?

A.   The Corporation aims to ensure London remains a global leader in adopting new technologies and rolling out innovative products and services in the financial and professional services sector.

Domestically, we set up and continue to support Innovate Finance in its work to advance opportunities for London’s dynamic FinTech sector. Most recently, we established the Fintech Strategy Group (FSG) with Innovate Finance. The FSG will act as a platform for senior industry leaders to foster open and collaborative dialogue on the future of UK FinTech. We also host the annual Innovate Finance Global Summit at Guildhall, which this year welcomed 2,000 attendees from 45 countries.

I chair a new FinTech Steering Board which will inform the Department for International Trade’s approach to supporting firms’ move into new markets through the government and regulator led FinTech Bridges. We currently have bridge agreements with Singapore, China, South Korea, Hong Kong and Australia.

We recognise there are many stakeholders in this space and work collaboratively with them to achieve our shared goals. Looking ahead, we hope to engage with the government, regulators and TheCityUK to help deliver the government’s Fintech Sector Strategy and deepen the penetration of its Open Banking initiative.

Q.   Are Brexit negotiations causing London to rethink its role as a financial center?

A.   Not at all. The fundamental strengths of London remain irrespective of Brexit. It is a challenge, but London has always been an international financial centre and not just a European one. We are confident of London’s strengths – Brexit or otherwise. It does however mean we should be reaffirming these strengths on the international stage.

Our openness to international talent and our commitment to innovation will continue. That’s why on all the visits I’ve made so far, the representatives I’ve met still recognise the UK as an important partner, and are looking for ways to strengthen their relationship with the UK.

Q.   You are advocating for a Brexit that works for City firms. Loss of passporting would be a major factor in decisions on where to locate after the UK leaves the EU’s single market. Where do we stand with the idea of mutual regulatory recognition? Can you define that concept for me? Is this a realistic possibility?

A.   We’re advocating a Brexit that works for consumers and businesses across the UK and the EU.

Mutual Regulatory Recognition is a simple concept. In essence, if we trust each other to check firms are doing the right thing, we don’t have to repeat each other’s checks, saving everybody time and money.

In financial services, at the point of Brexit we will be completely aligned with the EU. On top of that, our regulators share a commitment to high standards on financial stability and consumer protection. So we are supporting the IRSG’s proposal to use this as the underpinning for a system of mutual access, based on mutual recognition, supervisory cooperation and shared dispute resolution. So long as our regulations remain converged, there is no need to erect unnecessary barriers to trade in financial services.

Financial and Professional services are hugely important to the UK economy, and to businesses and consumers across the whole continent of Europe. There is every reason for both the UK and the EU to want them included in a comprehensive deal.

The IRSG model is ambitious, but given the scale of the UK/EU relationship this is entirely appropriate. It is the right answer for an open, outward-looking financial sector. And while the conditions are most ripe for this in the UK/EU relationship, there is no reason why the principles it sets out cannot be used to open up specific financial services markets with other countries across the world, for instance through the Global Financial Partnerships Strategy the Chancellor set out at Mansion House last week.

Q.   Going forward, will the UK’s financial services and financial technology firms still be able to attract top talents from around the world, and retain the people they already have?

A.   London has always been an attractive place for international workers to live and work.

Just this week (25/06/2018) London was crowned the most popular city in the world for work in the biggest ever study of workforce migration trends, beating the likes of New York, Berlin and Barcelona.

Ever since the Brexit vote, the City Corporation has asked government to deliver a deal encompassing ‘Three Ts’ – trade, transition and talent.

On trade, we have asked for a practical, progressive and ambitious free trade agreement based on mutual market access, regulatory alignment, supervisory cooperation and if required, dispute resolution.

The sector has been clear that a transitional arrangement is needed to ensure firms are able to seamlessly move from one phase to the next – a move that would benefit the whole continent.

Finally, talent – a key priority for the financial and professional services industry. The Corporation continues to advocate for a post-Brexit immigration policy that ensures British businesses have access to talent from around the world and allows talented people from the UK to share their skills abroad.

The government understands the challenge, and we support the steps it has taken to ensure continued access to FinTech talent from abroad. Most recently, we welcome the newly announced visa route for entrepreneurs who want to start a business in the UK. We also applaud its commitment to fast-tracking the registration process for EU citizens who want to stay in the UK post-Brexit.

We will continue to work closely with government to identify what a future immigration policy could look like.

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