It was in October 30 years ago the UK financial market was deregulated, prompting the ’Big Bang’ in the City of London which led it to become the EU’s fintech capital but we now stand on the brink of a second pivotal turning point, according to Covercy.
Doron Cohen, CEO of Covercy, a cross-border business payments service, thinks that the deregulation of UK financial markets, thanks to the ‘Big Bang’ 30 years ago, was a momentous occasion and arguably the most important moment in helping the City Of London to become Europe’s fintech capital.
He says, ‘The adoption of what was then cutting-edge technology, like electronic trading, brought the financial services sector in the UK kicking and screaming into the twenty-first century.
‘Its effect is clear, currently the industry employs over 7 per cent of the UK workforce, producing nearly 12 per cent of total economic output, while contributing £66 billion in taxes and is one of the rare British success stories abroad, generating a trade surplus of £72 billion.’
Cohen continues, ‘However, technology is once again revolutionising finance, and in the post-Brexit world, we’re on the cusp of the next Big Bang, this time specifically in the payments sector.
‘It is one of the last areas of finance that traditional banks have a stranglehold of, possessing a 95 per cent share of the business payments market. They place unnecessary middlemen at the centre of these transactions to bolster prices and effectively overcharge UK businesses.’
More than two thirds (69 per cent) of the UK’s 53,000 SME exporters make at least 20 transactions a month. A company making 20 transactions of £30,000 could overpay an average of £4,400 monthly or £52,800 a year in completely unnecessary fees.
Cohen concludes, ‘A ‘hard Brexit’ is on the horizon and many businesses are worrying about how they are going to compete internationally in the coming years. As the UK is likely to lose access to the single market, firms will face a number of new tariffs and expenses when seeking to do business with neighbouring EU states. This means every pound they spend is more crucial than ever before.’