Blog

Brexit’s HiTech & Fintech Impact on Israel

Brexir-puzzle - Israeli flag - mdm

 

The world is in shock; no one expected this kind of Brexit outcome. The Sterling hasn’t been this unstable since 1985 and economists, politicians and business magnates are predicting the Brexit vote will mark a huge cataclysm for both England and Europe, for Forex, Fintech, international banking and potentially for all other countries invested or connected with England as well.

 

But while some predict Brexit signals a diplomatic downturn for Israel, it may, in fact, be an economic windfall as one of Israel’s leading HiTech, Finance and Fintech competitors bows out of the race at astonishing speed.

 

Is England leaving the EU or is the EU leaving England?

In the last decade London has established itself as a dominant startup, Hi Tech and Fintech world center. Just last week the Accenture annual Fintech report for 2016 stated that of all the VC being invested in the UK in the past 5 years, “more than 90% of investment [is] going to would-be competitive fintech companies,” largely from European investors. But as Bhuwan Kaushik, the chief executive of Spectromax, a UK-based IT and digital services providers, has stated, “There’s a huge IT skills gap in the UK and it’s going to take a number of years to close it. Leaving the EU at a time when the UK is in need of skills will be a huge blow to UK businesses … [which could] consequently stunt UK startup growth.”

 

Forbes reported that Ning Li, the founder of Made.com, an e-commerce firm based in London, may be more optimistic about the future, but for now he believes “it’s already notoriously tough to hire good developers and engineers in this country [and] part of the shortage has been filled by European immigration. If the U.K. suddenly says tomorrow that European citizens will require certain visas … that will of course limit greatly the hiring from Europe for skilled workers.”

 

How will the Fintech industry respond?

Up till now London has also been a strong Fintech, financial and banking capital, and as the Accenture 2016 report concluded, Fintech is not necessarily a competitor of traditional banking structures, but is working itself into being a complementary system that progressive banks can adopt and benefit from.

 “Fintech start-ups themselves are not emerging as the main competitive threat for most areas of banking. Banks that can assess, adapt and adopt these new technologies most quickly will be best positioned to achieve their desired position in the new industry structure.”

 

However, while the Banking industry is undoubtedly taking a huge hit from the Leave vote, Fintech is in its infancy, so the industry is predicted to be more adaptable. Fintech may have an opportunity to expand and independently “fill any spaces” as Rhydian Lewis, the co-founder and CEO of the peer-to-peer lending company RateSetter, predicts.

 

Nevertheless, The Guardian has reported that Britain’s Fintech is set to be particularly hard-hit and believes that Brexit will affect Fintech regulation and halt the steady movement of talent from across Europe towards London. As part of the EU, businesses regulated in England were automatically regulated across Europe and importing European talent to work in London was comparatively a quick and painless procedure. Now new UK regulations and the split from Europe will put an end to these advantages and affected industries are left hanging in the balance.

 

Due to these significant obstacles, many businesses may not completely close their London based offices, but are looking to relocate their ‘headquarters’ elsewhere, to more stable territory.

 

So where will the Fintech and HiTech hub relocate?

Predictions are rampant, but considering the strong growth of the Hitech industries in Ireland in recent years, Dublin looks to be set to reap the biggest benefits of the British Leave vote. Germany and Switzerland are also vying for places, as they also boast growing HiTech and Fintech industries.

 

Yet European states may also be viewed as “unstable” territory, as the fallout from the Brexit vote has yet to reach its pinnacle. Many predict it will cause a serious blow to the European Union, a severe recession at the very least or possibly even its complete disintegration. From this vantage point, relocating HiTech and Fintech headquarters to other European states, even ones as strong as Ireland, Germany and Switzerland, may be simply be jumping from the frying pan into the fire.

 

Israel, however, may see unprecedented benefits coming their way. As an undisputed international HiTech and Fintech leader, The Start-Up Nation not only boasts a well-established industry, while many other HiTech centers are just emerging and still unstable. Israel also benefits from an abundance of the talent that many consider is lacking in England. Israel’s increasing ties with Eastern Europe and the former USSR states has made Israel an ideal space for multi-linguals to explore opportunities and while standard wages may not be as high as in England, they are certainly much more attractive than in Eastern Europe.

 

And with the opening of the newest international FinTech hub, The Floor, in the Bursa just last week, Israel might just be set to see some of the financial fallout of the Leave vote redirected to Tel-Aviv’s ripe and ready shores.

The Floor is backed by the Pando Group, a $250 million Chinese-Israeli VC fund, and is billed as “a physical home for local Fintech entrepreneurs and … [a] focal point of access to Israeli Fintech for leading international financial players, tech giants and VC’s.”

 

Conclusion:

As a gateway to between unstable Europe and the distant Far East, Israel is in the perfect position to jump on this opportunity to pitch and win the ‘home base’ of many international HiTech and FinTech firms. Some sources may site political reasons, such as the BDS movement, as being an obstacle to Israel receiving this windfall, but with Europe’s focus being redirected towards stabilizing their economy and the weakening of BDS support this year, this challenge may not be as significant as some would believe.

 

Is it destiny or mere chance that the Finance Magnates 2016 TLV Conference is also due to commence at Stuko this Wednesday? Finance Magnates is a powerful triangle of news, research and events catering to the needs of the entire global trading industry. As industry leaders in international finance information, this Wednesday’s conference will offer a unique opportunity for Hitech, Finance and Fintech in Israel to get the inside scoop on the fallout from Brexit and on how to redirect the industry and investors to focus on Israel shores.

 


June 27, 2016

Contact us

SEND YOUR CV


Please attach Word or PDF format only


SEND YOUR CV


Please attach Word or PDF format only


SEND YOUR CV


Please attach Word or PDF format only


SEND YOUR CV


Please attach Word or PDF format only


Contact me

Contact me

Contact me

Contact me