German digital challenger financial institution N26 is pulling out of the UK as a result of it can’t to function after Brexit except it apples for a UK banking licence.
It blamed the lack of passporting rights, which at present enable European Union (EU) banks to serve clients throughout the buying and selling block, for its resolution. The financial institution has round 80 folks supporting the UK operation from Berlin and London.
The Berlin-headquartered fintech, which was based in 2013, will shut its 200,000 UK accounts by mid-April.
“With the UK having left the EU at the end of January, we will in due course no longer be able to operate in the UK with our European banking licence,” mentioned a press release from the financial institution. “As such, we can no longer open new N26 accounts and will be closing existing accounts on 15 April 2020.”
Fellow German challenger financial institution Fidor, which got here to the UK in 2015, ended its UK operations in September 2019. “Due to the uncertainties surrounding the UK market, we have decided to withdraw our product and service offering in the UK,” the financial institution mentioned in a press release.
Although it didn’t cite Brexit straight, many fintechs are getting ready for all times after the UK leaves the EU single market, which is significant to monetary providers companies that wish to function throughout Europe.
Fidor founder and former CEO Matthias Kröener, who left the financial institution in April 2019, mentioned that many available in the market assume Brexit is an excuse for N26. “After all, the Brexit referendum had already happened when N26 entered the UK market. When Fidor was on the UK market, the Brexit referendum had not happened, so it was a surprise,” he mentioned.
He added that persevering with uncertainty about what deal the EU and UK will come to is tough for challenger banks. “If there was a hard Brexit, from day one you would no longer have a licence, which is a horror story for EU banks in the UK, and UK banks in the EU,” he mentioned.
Kröener mentioned one other problem for banks reminiscent of N26 is that the UK is an especially aggressive market: “In terms of challenger banks, it is way more competitive than Europe and there are unique complexities in the UK.”
He mentioned all that is destructive on core key efficiency indicators (KPIs) and it’s potential that N26 didn’t assume it was value staying to get a UK licence.
Fintechs are small and might make main adjustments to their operations to deal with challenges reminiscent of Brexit. Earlier in February, fintech Revolut mentioned it’s creating 50 new jobs within the Republic of Ireland because it strikes its European funds operation from London. The firm is making the adjustments because of EU passporting rights ending for UK banks post-Brexit. Revolut will rent as much as 50 workers in Ireland this yr to serve its Western Europe enterprise clients.
But not all fintechs are this ready. According to a survey from fintech business organisation Innovate Finance, revealed in September 2019, greater than three-quarters (78%) of UK fintechs are inadequately ready for the ramifications of a no-deal Brexit, and 45% don’t really feel ready if there’s a transition interval, which is the place we are actually.
The findings from the survey additionally revealed that 17% of respondents are contemplating transferring to a unique jurisdiction because of Brexit, with the principle considerations being across the lack of passporting rights and decreased entry to expertise.
In November, UK fintech Azimo launched its Dutch subsidiary, which was impressed to protect the cash switch firm from the damaging results of Brexit.
The cross-border cash switch fintech began searching for a location for its European operation after the UK referendum end in June 2016. All cross-border transfers constructed from exterior the UK will now undergo Azimo’s Amsterdam-based operation.