TransferWise Ltd., a UK-based money exchange company, was recently in the news after its co-founder Taavet Hinrikus was quoted in a Bloomberg Technology article as saying: “While we’re happily headquartered here in London, if I were setting up TransferWise today I would not choose London.”
Hinrikus was formerly the director of strategy at Skype and is an advisor to the Prime Minister of Estonia on digital agenda.
Has Brexit begun to affect the thinking of Fintech firms about the viability of the UK as a hub? We got in touch with TransferWise to find out in detail about their thoughts about Brexit and its likely impact.
Passporting rights
TransferWise was founded in 2010 and it began its operations in 2011. The company sees a million users each day use its services as they send £1 bln each month. According to TransferWise, their services help users save more than £1.5 mln each day compared with if they had used another provider.
On the question of whether the company would move out of London due to Brexit, TransferWise tells us:
“If the UK loses passporting rights as a result of Brexit, then in order to serve our customers, we will need to get licensed in another European country and this means we would set up an office there. London remains our global HQ.”
Brexit’s impact unknown
On the question of what impact Brexit will have on the broader money transfer business, a TransferWise spokesperson says:
“Two of the main benefits of being a part of Europe for a Fintech business are passporting but more importantly the free movement of talent. We have no idea yet what the impact of Brexit will be but losing those two things are critical for a Fintech business.” The free movement of talent across borders is indeed an issue that would need sorting out post-Brexit.
Record year for tech deals
According to a report published by GP Bullhound, TransferWise is one of Europe’s fastest growing unicorns. Also, according to the same report, the UK has the largest number of fastest growing unicorns, which are fast-growth, profitable businesses at 18 with a cumulative value of $39.6 bln.
Despite the clouds of Brexit looming, British tech deals hit a high in 2016 according to GP Bullhound. Whether the growth in the tech sector can be maintained post-Brexit is an interesting question.
The Sunday Telegraph’s figures show that there has been a decline in the number of deals that were signed up by the tech industry post the June 23 referendum, with post-referendum deals coming in at 1,583 and pre-referendum at 2,426.