Is the loss of the banking “passport” the biggest risk posed by Brexit to financial companies in the UK? Not according to Paolo Galvani, founder and CEO of fintech startup MoneyFarm. As the UK prepares to leave the EU, there is much more at stake than the opportunity to operate with the same license across European countries. In his views, the access to a unique talent pool and the system of entrepreneurship built around London’s financial centre have a larger impact on the way fintech companies operate than the banking passport. It is not a surprise that in a survey by Synechron, almost three-quarters (72%) of British bankers said that in five years London will still be the financial capital of Europe.
The story of MoneyFarm is emblematic of the situation fintech startups face as a result of the EU referendum. The digital wealth management firm was founded in Italy in 2011 and established in the UK in 2014. “We currently employ some 60 staff, 35 in London and the rest in Milan and Cagliari,” says Galvani. “We could have worked in the UK with the authorisation of the Bank of Italy but we wanted to expand, so we applied for a broader license from the UK’s Financial Conduct Authority (FCA) and we returned the Italian one.”
How does the bank’s passport work for you?
In Europe there is an agreement among supervisory bodies so that a financial entity licensed in a country of the European Economic Area can “passport” its authorisation in the other EEA countries. The authorisation by the FCA, the British regulatory authority, serves therefore across the European Union…