FinTechs cautious about international expansion post Brexit & COVID-19, reveals Newfound’s study

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A new study by Newfound has stated that FinTechs are cautious about international expansion post the economic fallout from Brexit and the COVID-19 pandemic. The survey conducted on 50 FinTech executives revealed that despite the fears, the majority of the FinTechs plan to expand internationally in the next 18 months owing to diversify revenue streams, access to talent, and develop strategic hubs as key drivers.

“The fintech industry was forged in the 2008 financial crisis, and it is no surprise that the sector is resilient and optimistic in the wake of macroeconomic events like Brexit and COVID,” said Peter Gillingwater, CEO, Newfound. “It is promising to see so many firms are looking to expand over the next 18 months. The sector is emerging strong after a turbulent year, which bodes well for the European fintech market. However, growth may be slower than pre-pandemic levels, and fintechs are asking for more support from the government and industry to give them the best chance of success.”

The report stated that 55% of the FinTechs would be hesitant to set up a base in the UK because of Brexit. FinTech executives cite a lack of access to talent (80%), limited availability of funding (80%), and the macroeconomic situation caused by COVID (60%) as the biggest inhibitors of market expansion. The key drivers for FinTech expansions

68% of fintech executives expect to expand into new markets in the next 18 months, with nearly one third “ready to expand now and actively seeking growth opportunities.” 26% of the FinTechs expect to launch in new markets next year.

The study also revealed FinTechs also want the UK government to do more to help fintechs expand and attract fintech firms to the UK. 66% said that the government could do more to support international firms. And 42% said that tax breaks and support programs that make it easier to plan expansion could help make the UK a more attractive destination for global fintechs.