Written by: Niamh de Niese | Director & Head of BNY Mellon’s EMEA Innovation Centre
It is one year since the official opening of our EMEA Innovation Centre (EMEA IC) here in London – a space which enables creative minds from financial services and technology to collaborate and create ground-breaking solutions which reimagine the future of finance.
I am genuinely excited by some of the ideas percolating in our EMEA IC. I’m bound to say that, I hear you say. And you are right to be skeptical but hand on heart; the imagination, passion and focus of those coming through our doors each day is truly inspiring.
Since joining BNY Mellon in September, one question I’m regularly asked is, what do we mean by reimagining the future of finance and what is the outlook for European fintech specifically? Looking ahead to the next 12 months, there are many themes I could reference, but narrowing it down to the top three I would say they are blockchain, regulation and Brexit.
Blockchain interests me hugely, particularly its potential role in accelerating the implementation of the European Commission’s proposed Capital Markets Union project.
Blockchain could, for example, be a catalyst for greater integration of Europe’s financial markets by helping break down some of the long-standing barriers to cross-border investment; unlocking access for small and medium sized businesses (SMEs) across Europe to new avenues of capital. This, in turn, would hopefully stimulate economic growth across Europe and create new jobs. As well as lower costs and make the financial system more resilient.
Then there is the evolving fintech regulatory environment. Our EMEA IC is currently engaged with two important EU regulatory projects, MiFID II and PSD2 (Second Payment Services Directive), exploring ways to leverage our technology platform, NEXEN®, and fintech services to efficiently fulfill regulatory obligations and reduce compliance costs both for BNY Mellon, and our clients.
PSD2 requires that all EU Member States implement these rules as national law by 13 January 2018. In theory, the UK will be in the middle of exiting the European Union around this time. So what this means for financial institutions based in the UK is, as yet, unknown. My advice to them is to keep urgently embracing the opportunities presented by PSD2 and press ahead with plans to comply – partnering custodians and fintechs to develop efficient and cost effective solutions. The UK could remain within the European Economic Area (EEA), for example, where PSD2 will also be in effect.
And finally there is Brexit which, of course, is more of a theme for fintechs in the UK than the rest of Europe. Whilst it is far too early to speculate on what the precise outcomes will be of the upcoming Brexit negotiations and the impact of these decisions on our sector, questions are being asked around talent mobility.
The potential loss of passporting and possible restrictions on the free movement of people could pose challenges; both for established fintechs who are based in Britain and want to attract talent from the Eurozone and, EU fintech entrepreneurs looking to launch an idea and choosing their ‘home’ location.
As we know, Amsterdam, Stockholm and Berlin, to name a few, are established and popular fintech hubs which could, in theory, prove more attractive than London post Brexit. But I don’t foresee anyone making rash decisions and changes in the next 12 months. Will they overtake London in dominance in a post Brexit world? Ask me again this time next year.
These are very exciting times for our industry and whilst the geopolitical headwinds present some cause for concern, I’m very looking forward to continuing our discussions with policymakers, our clients and technologists in 2017 to explore the many opportunities which are emerging through these changing times.