According to research group, Bruegel, global banks in London may have to relocate £1.6 trillion of assets to the continent after Britain withdraws from the EU – this would put at least 30,000 UK jobs at risk, regardless of how well negotiations go.
These assets represent 17 per cent of the UK banking system, and depending on trade restrictions resulting from Brexit, financial firms will have to move a large proportion, if not all, of this business to countries inside the trading bloc once the UK exits in 2019.
But could it be that fintech will come to the rescue and actually create jobs in the City? Bank of England Governor Mark Carney believes so. Here, we explore the feasibility of fintech rescuing City jobs when Britain leaves the EU.
There are valid arguments to suggest fintech could create as many jobs as are lost as a result of Brexit (30,000), although this will take up to four years. There would need to be a period of transition, to allow for the transformation of jobs in existing IT legacy banking organisations.
There are without doubt some good opportunities out there – just last month Barclays announced it would be hiring over 2,000 people in the next three years to work in Rise London, the new financial technology co-working space set to be the largest fintech accelerator in Europe. While it’s not yet clear exactly how these roles will be defined, the bank clearly has big plans for taking on a new influx of talented financial professionals with technological capabilities.
Rise is a successful model, already existing in New York, Cape Town, Mumbai and Tel Aviv. The London branch will see over 40 fintech firms and the bank’s own corporate clients housed under the same roof, to streamline new business opportunities. Crucially, the space will play host to Barclays’ own banking and tech teams.
On the flip-side, fintech by its very nature is supposed to increase efficiencies and improve processes in traditional banks through automation, effectively replacing human beings in some areas (other than specialist roles dedicated to actually implementing and overseeing the systems) – so is the Barclays argument fundamentally flawed? If tech leads to automation, surely an increase in fintech within banks would reduce demand for people in the City?
But when Barclays and others are investing huge amounts of money into new projects designed to embrace fintech and fundamentally change the face of “traditional” banking, it’s hard not to get excited and imagine the possibilities of a significant upgrade to what is already, according to Mark Carney, “the world’s leading international financial centre and global hub for Fintech.”
Through Rise, Barclays aims to help its employees, customers and clients to do things faster, better and at lower cost. With this objective in mind, there is no reason that exciting, future-proof City jobs won’t be available after Brexit. It is worth noting that the government is keen to continue attracting the best global talent allowing it to stay ahead in fintech. On one hand, this is great news because it shows the need for talented people and will naturally increase the quality of work. On the other, for the candidates themselves, it means competition for jobs will become increasingly high.
But competition, among ourselves and with people across the globe, is what will keep the UK on its toes and constantly evolving.
Initially, the City will lose jobs when Britain eventually leaves the EU in 2019, that is a fact. But from the exciting developments coming out of Barclays and innovations within other banks, it is clear fintech could well come to the rescue, even if it takes a while. To make it a seamless transition, however, banks need to ensure their employees are skilled not just in finance but technology as well, to future proof themselves and ensure Brexit does not rob the City of its valuable talent.
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