| LONDON, March 8
LONDON, March 8 Some of London's brightest
financial technology talents have begun weighing a future
elsewhere, worried Britain will lose its hard-won position as an
industry hub if it opts out of the European Union in four
London has worked hard to cultivate its reputation as a top
global location for so-called "fintech" firms -- technology
startups that aim to compete with traditional banking and
financial services, such as money transfer company TransferWise,
crowdfunding platform Crowdcube and peer-to-peer lender
The British capital is in a fierce race with San Francisco,
New York, Berlin and Hong Kong to remain a leader in the
fast-growing sector, an ambition outlined by Finance Minister
George Osborne in 2014.
But as a June 23 referendum on British membership in the EU
nears, the industry is worried London will lose momentum and its
reputation for innovation if Britain has to renegotiate its
trading relationship with the EU or deal with economic fallout
from an "Out" vote.
Seven out of 10 London-based fintech companies interviewed
by Reuters said they might move their headquarters. Two said
they would definitely stay, and one declined to comment either
way. All 10 said British exit from the EU, or "Brexit", was a
serious concern for their businesses.
"I don't think there's a contingency plan, which is part of
my personal concern," Eileen Burbidge, a partner at venture
capital firm Passion Capital, which has backed corporate
information company DueDil, bitcoin exchange Coinfloor and
online payments firm GoCardless.
"I think there would be a bit of a reset of people, offices,
HQs and activities if Britain were to leave Europe," added
Burbidge, who also serves as the British Treasury's envoy for
fintech and chairwoman of government agency Tech City UK.
London Mayor Boris Johnson has been a particularly
enthusiastic booster of fintech, which marries the city's
longstanding strength as one of the world's top financial
capitals with its more recent success as a tech startup hub.
He has since emerged as one of the leading voices calling
for Britain to leave the EU. A spokesman for Johnson declined to
comment for this story. In general however, campaigners to take
Britain out of the European Union say threats by companies to
leave London are overblown.
"It's absolutely ridiculous. Companies said they'd do this
if we didn't join the euro, and how many of them up and left
when we didn't?" Jordan Ryan, a spokesman for "Out" campaign
group Leave.EU, said. "Nobody's going anywhere. It happens every
Britain's London-focused fintech sector was the biggest in
the world last year, earning 6.6 billion pounds ($9.4 billion)
in revenue to beat California and New York, according to a
report by accounting firm EY commissioned by the British
While that is still a pittance compared to the revenue of
traditional banks -- on its own JP Morgan Chase brings in 10
times as much -- the nascent sector is one of the fastest
growing in the world.
More people work in fintech in Britain than in Singapore,
Hong Kong, Germany and Australia combined. (bit.ly/1QEqELR)
Investors injected over $700 million into British fintech
last year, the report said, encouraged by accommodating
regulation and the ease of doing business in other European
markets from London.
But startups that had flocked from all corners of the world
are nervous about losing access to European customers, tech
talent and funding.
Members-only fintech association Innovate Finance said a
survey showed 82 percent of firms wanted Britain to stay in the
EU, believing Brexit would be a "disaster" and isolate London
from the wider industry. About a quarter of the London-based
trade group's member firms are run by CEOs from other EU
"Would there be a flight of capital out of the UK? Would
investors be spooked? All of it is so uncertain that it's
dangerous," said Dan Gandesha, CEO of real estate crowdfunding
platform Property Partner.
Some consider English-speaking Dublin or multi-lingual
Luxembourg potential successors to London's fintech mantle in
Europe, but a German city seems most likely as fintech firms
there raised about $550 million last year, only slightly less
than in Britain.
"Other cities such as Berlin or Paris would start to look
more appealing than London as a European hub," said Taavet
Hinrikus, chief executive of TransferWise, which is backed by
British billionaire Richard Branson.
"I hope we don't have to make that decision, but yes we are
considering our options at the moment."
Firms whose business models rely on being part of the EU are
particularly worried. Monese, which provides European immigrants
to Britain with bank accounts "in minutes" via a mobile app, has
begun thinking of post-Brexit options as the number of migrants
could sharply decrease.
"We would rather it didn't happen," Monese Vice President of
Growth Mulenga Agley told Reuters, saying the company might
decide to shift its main business from Britain to mainland
Europe and focus on customers migrating to and within the
"(Brexit) would make us seriously consider whether we should
be in the U.S., rather than the UK," Property Partner's Gandesha
said, pointing to reduced growth opportunities in Europe.
Other firms expect Brexit to upset operations, but not
enough to make them move.
International payments company Currency Cloud said it would
stay in Britain as it needed to keep strong ties with what it
sees as the world's unmatched foreign exchange capital. The firm
is backed by Sapphire Ventures and Japan's Rakuten.
CEO Mike Laven said, however, that as Brexit would raise
costs and inhibit growth, he would probably have to focus more
on growing the firm in Europe to "keep things going correctly".
"Would (London) be the right place for all of our jobs? I'm
($1 = 0.7021 pounds)
(Reporting by Richa Naidu, editing by Sinead Cruise and Peter