How will Brexit impact the payments industry in the UK? An Earthport insight
Valli Ardalan is the Vice President of Business Development and Marketing at Earthport. Here he shares with us the impact Brexit will have on the payments industry in the UK.
How will Brexit impact the payments industry in the UK?
As the post-Brexit outlook continues to remain uncertain, it is difficult to predict the precise impact on the UK financial sector. There’s no denying that the uncertainty in any form makes short term and long-term operations trickier. To that end, being prepared, agile and remaining positive is more important than ever in these unprecedented times.
The regulatory perspective
Post-Brexit, the UK most likely will no longer be in the single market, and this has the potential to have a dramatic impact on the payments and financial services industries here.
In May, the European Council approved the UK’s application to remain in the geographical scope of the SEPA scheme. Although this is good news as it will mean that FinTech companies that use banks will be able to maintain their level of access, it brings many regulatory issues to overcome. For example, in relation to PSD2.
Remaining part of the SEPA scheme without being an EU member will mean that, similarly to Switzerland, the UK will lose PSD2 protections. This results in us being treated differently from other EU members, who can enjoy the ability to move money, data and people freely, whereas the UK will potentially face increased friction in all these aspects. It is likely that some transactions between the UK and the EU will be caught by PSD2 regulations, in which case, we would still need to adhere to the directive, without being part of the EU.
The importance of passporting
Undoubtedly, a key concern in the post-Brexit scenario is the loss of ease with which both payment and financial institutions can operate all over Europe without barriers. The UK’s exit from the EU will likely see it lose this passporting right, and, consequently, payments businesses have been preparing to mitigate this risk for some time.
Companies looking for other EU-based jurisdictions through which to be licensed are commonly approaching European countries close by, particularly Ireland and the Netherlands, as well as other FinTech hubs - notably, Belgium, Sweden and Lithuania.
Bridging the talent gap
With London being one of the world’s top FinTech hubs and financial centres, the prospect of a hard Brexit brings concerns around reduced access to a broad talent pool. EU citizens could potentially require sponsored immigration status and may face uncertainty around their status when in the UK and access to government benefits such as the National Healthcare Service. This brings the risk of UK businesses losing out on the opportunity to recruit talented professionals, from diverse backgrounds, skill sets and cultures. If this happens, no doubt it will be to the detriment of both job seekers from within Europe and to UK businesses hoping to innovate and grow.
Seize the opportunity
Despite this, it is essential that throughout these times, the payments industry remains positive and continues to innovate in order to make the best of a challenging situation. Brexit will certainly be a test for UK businesses, and those who can adapt smoothly will be more likely to survive, and they should recognise that, as with all change, the door is open for innovation. Regardless of Brexit, we must remember the UK is still well placed to develop international relationships with other key players and continue to build our thriving FinTech industry in the face of potential adversity.
Nymbus enters strategic partnership with Plaid
Nymbus, a leading provider of banking technology solutions, has partnered with Plaid, a data network powering the digital financial ecosystem, to more instantly authenticate and fund customer bank accounts for financial institutions.
This new integration will allow Nymbus bank and credit union clients to securely onboard new users in a matter of seconds, which in turn translates to more active and engaged banking experiences. Plaid’s data network enables consumers to connect their financial accounts at over 11,000 institutions globally to more than 5,000 digital finance apps, including leading payments, investing, and budgeting tools.
What are the benefits of the integration?
Benefits of the Nymbus and Plaid integration for financial institution customers include:
- Improve user identity verification and reduce fraud.
- Instantly authenticate and link members’ bank accounts.
- Streamline ACH transfers between any bank or credit union in the US.
- Access and analyse comprehensive transaction data.
- Validate real-time account balances to protect against overdraft and enable account pre-funding.
“As more consumers than ever before rely on digital finances for their everyday lives, financial institutions need to meet their customers where they are while supporting safe and reliable money management experiences,” said Sarah Howell, Chief Alliance Officer at Nymbus. “Our expanding network of partners are important contributors to Nymbus’ combined portfolio of the technology, people and process available to quickly innovate with new routes to market and revenue streams.”
Continuous growth and expanding partnerships
Founded in 2015, Nymbus has continued to grow. Most recently the company has closed a new round of financing led by the Curql Fund. The US$5 million investment will be used towards Nymbus CUSO and accelerate a shared commitment to breakthrough technology for ensuring continued growth and stability for the credit union community.
Nymbus CUSO was founded in March 2021 to help break through barriers to growth, and its mission is to connect credit unions with trusted fintech offerings that both simplify technology delivery and enable new digital revenue opportunities.
Last year Plaid set a goal to move 75% of its traffic to APIs by the close of 2021, calling it “one of our top priorities as the industry moves full-steam ahead toward a fully digital financial system.”
Recently it has announced an open finance partnership with Capital One, a digital finance innovator, and the successful completion of its migration to the Capital One API. They have also completed or have in-motion data access agreements with major US financial institutions, including U.S. Bank, JPMorgan Chase, Wells Fargo, and others.