Can Fintech rescue City of London jobs after Brexit?
Bank of England Governor Mark Carney has recently claimed that Fintech could help promote growth and boost stability for the United Kingdom. But with things looking majorly uncertain for the City of London ahead of Brexit, Business Review Europe has decided to evaluate how much merit his comments might have.
Carney spoke last month at the UK Government's International Fintech Conference about how the bank could help build the right infrastructure for Fintech to realize its potential.
Things are looking altogether uncertain for the UK right now with an election pending at the start of June and subsequent negotiations due with the European Union. These talks will determine the whys and wherefores of the trade restrictions that will undoubtedly be placed on the island after the country’s exit from the union is formalized.
Tens of thousands of jobs are expected to be lost in the City, regardless of the result of those negotiations, but there is hope in some quarters that Fintech could soften the blow by creating jobs to compensate for those lost as a result of Brexit.
Bertrand Lavayssiere, who is a managing partner at financial consultancy zeb, believes that Fintech may provide a few of the answers to the conundrum that the UK’s impending exit from the EU will pose.
He says: “Depending on the outcomes of the Brexit deal, it may well be an avenue for creating new jobs.
“If, in the worst case scenario, thirty-to-forty thousand jobs are slashed in the wake of Brexit, as has been suggested, then I do believe that Fintech could create that same number of jobs over time.
“But it won’t happen immediately. It will take at least four years to generate that number of jobs. A more thorough analysis would also be required, to take into account the necessary transformation of jobs in existing IT legacy banking organizations.”
The Fintech sector received a further boost at the beginning of this month when Barclays, boosted by first-quarter profits ballooning to over £1.7 billion (or €2 billion), announced that it would be hiring more than 2,000 people over the next three years to help populate what will be Europe’s largest Fintech co-working space in London.
But Dr Nathalie Moreno, who is a partner in the technology, commercial and data privacy team at British law firm Lewis Silkin LLP, predicts that while Fintech might lead to the creation of new jobs, that alone is unlikely to compensate for the profound impact Brexit is set to have on the City.
“It is interesting that Barclays’ recruitment drive around Fintech could be seen as having a wholly positive impact on the City’s employment health in the run up to Brexit," she says.
"The growth of Fintech within banks, by its very nature, is geared towards creating better efficiencies by increasing automation and streamlining the customer experience. Fundamentally, that means a potential shedding of job roles and a reduction in demand for people in City jobs – and banks in the City continue to shed their workforce at a rapid rate.
“While Fintech may create one or two specialist roles to help implement and run the systems, this does not and will not offset the many job losses that will occur. These newly created roles represent a fraction of the attrition."
Moreno points to the fact the City has been shedding job opportunities for years, a trend driven by increased regulation and outsourcing.
“The growth of Fintech will benefit some, namely the bank management and the Fintech organizations themselves, but a substantive impact on overall employment is highly unlikely.
“This is especially acute as we move ever closer to a full Brexit, which will cost tens of thousands of jobs in the financial sector."
Although nobody can yet be certain how much of a role Fintech will play in the City jobs market after Brexit, a role it will certainly have.
As Carney told his conference audience, the City is both "the world's leading international financial center and its global hub for Fintech". The ongoing investments of Barclays and others suggest they believe that's not likely to have changed once the dust settles on Brexit.
ServiceNow pumps millions into EU service compliance
ServiceNow, the digital workflow company, has announced a multimillion euro investment to help EU customers meet compliance requirements.
The legal, technical and organisational safeguards will help companies to comply with the the Schrems II judgment and European Data Protection Board (EDPB) Recommendations issued in June 2021.
ServiceNow’s investment means all EU-hosted data will be exclusively handled within the EU, and the cloud-hosted digital workflow provider claims its solution will come “without impact on current delivery and service”.
ServiceNow upgrade: free of charge
There will be no cost for current customers to opt in to the data compliance solution, even though ServiceNow is investing an unspecified multimillion euro sum and hiring more than 80 new staff across the bloc.
Mark Cockerill, vice president legal, EMEA and global head of privacy at ServiceNow, said: “With any regulation change, cloud services companies have a choice. They can adopt a ‘wait and see’ approach or get proactive and help customers and partners innovate. At ServiceNow we are on the front foot, continually investing in our customers, allowing them to operate with the highest level of choice and control over their EU data.
ServiceNow upgrade: ‘peace of mind’
“Our new EU-centric service delivery model will give our current customers and partners peace of mind. For customers and partners operating in highly regulated industries, or in the public sector, or those that have yet to make the switch to the cloud, this model gives them certainty and simplicity when selecting the cloud service that best suits their needs.”
Carla Arend, lead analyst, cloud in europe for IDC, said, “The Schrems II ruling has led European organizations to revisit their cloud-related data protection policies and processes when it comes to international data transfers through cloud services.
“Contractual, privacy, and security safeguards and the assurance that data will be kept and handled in the EU help European organizations to comply with European data protection laws while taking advantage of global cloud platforms. Vendors, such as ServiceNow, that invest to support their customers in response to this ruling are providing essential choice to their customers.”