LONDON — The founder and CEO of digital-only, startup bank Starling says EU law has been good for fostering Britain’s flourishing fintech — financial technology — sector and says she fears Brexit may set it back.
Anne Boden, who set up Starling in 2014, told the Financial Times in an interview:
“The EU has come up with some very good payment and banking legislation. I know the traditional banks don’t always like it, but if you look at it from a competition and innovation point of view, and especially for the development of fintech, then European legislation has been both important and good.
“We need to make sure we don’t miss out on the next wave of competition legislation.”
Boden highlighted the payment service directive, a law passed in 2007 that forced banks to open up national payment systems to new entrants. Starling recently became a member of Britain’s faster payments system itself.
However, Boden is worried that Brexit will cause the UK to miss out on laws such as the Payment Service Directive Two (PSD2), which forces banks to open up their data to new entrants. This will allow third parties to help people manage their accounts and loosen banks’ stranglehold of customer relationships. PSD2 comes into force in 2018.
Boden also told the FT that she worries bringing talent to the UK will involve more red tape after Brexit. This is one of the biggest concerns in the fintech sector, which is extremely multicultural.
London, the UK’s fintech hub, is facing increased competition from cities around the world to try and usurp it as the fintech capital of the world. UBS’ Dirk Klee told Business Insider recently that there is “huge competition” from the likes of Zurich, Berlin, Singapore, China, Silicon Valley, and Israel.
The British government appears to be making fintech a top priority for the UK’s post-Brexit economy. City Minister Simon Kirby told BI recently: “Green finance, Islamic finance, fintech — these are all growth areas that we’re at the cutting edge of.” He added later: “Brexit is an opportunity as far as fintech is concerned.”
Boden, a former executive of Allied Irish Bank, told the FT it is “disappointing” that Starling will be unable to launch across Europe using passporting rules. Theresa May has made clear that her government plans to sacrifice EU passporting rules, which let financial firms sell services across the EU from London, in order to regain control over immigration.
Starling has yet to launch but has gained its banking licence. The startup bank, which has 80 employees, raised $US70 million from US trader Harold McPike last year.
Starling is one of several so-called “neobanks” in the UK, offering banking or bank-like services through mobile apps. Other fully fledged app-only banks include Tandem, Monzo, and Atom.
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