Please give us an overview of the current legal market in the UK and how any recent developments have impacted your practice?
The UK fintech market has been very busy over the last year, and appears not to have been significantly impacted by Brexit as yet. We are starting to see legal work in fintech move more often from pure start-up work to either partnerships with large incumbents, or to those large incumbents seeking to carry out fintech projects themselves and looking for lawyers with experience of working in the area. This has in turn led to growth and stabilisation of the practice area.
What significant trends exist in the fintech market presently? Are you seeing these just domestically or internationally as well?
There is a significant growth in the work around open banking as the area develops and matures, and the open banking APIs published by the major UK banks become ever more sophisticated and reliable; growth of this area in other jurisdictions is further behind, often due to lack of standardised API specifications.
There has also been a rationalisation of the market in cryptocurrencies and blockchain, as the ICO investment boom has narrowed and focused on projects with genuine utility, and more traditional structures around cryptocurrency start to bed in.
What are the three biggest challenges to practising fintech in the UK at the moment?
The first is that while technology law and regulation have traditionally been separate disciplines or areas of legal practice, fintech amalgamates the two, hence there is the practical challenge of making sure lawyers practising in fintech are sufficiently versed in both technology law and financial regulation.
The second is sorting the wheat from the chaff, especially in the cryptocurrency space where there has been a lot of excitement and investment but less in the way of quality sustainable offerings.
The third is uncertainty over Brexit, and not knowing even at this late stage what kind of deal may be reached to enable fintechs to conduct business internationally, or what the rules governing such conduct might entail.
How does fintech fit into the firm as a whole? Is it easy to collaborate with other teams?
It sits across all the practices. It is led from the core commercial technology team, which incorporates the financial regulatory team and the data protection team; but it spans across corporate/investment, IP and disputes, employment, and tax.
We are all sat in open plan and meet regularly to discuss what’s going on in the industry and what we’re involved in; the nature of the work also means that we are frequently working together on matters, combining our own various areas of expertise in the same way that much of fintech is combining previously disparate skill sets.
What advice would you give to the next generation of fintech lawyers?
Be adventurous in what you set out to learn, get to know the industry at all levels, and be prepared to read a lot of regulation and make a call on how existing laws apply to new pieces of technology and business structures that legislators never even thought of.
What are your predictions for fintech in the UK over the next five years?
We predict that the adoption of fintech solutions will become more widespread, through a mixture of distribution via the trusted brands of incumbent financial institutions, and roots-up usage by young adults as their first encounters with financial services.
More financial institutions will partner with fintechs in cobranded services, and it will be easier to get these deals over the line as the institutions continue to learn to deal with start-ups in different ways from how they have previously dealt with major IT suppliers.
Brexit fears are overstated in this area, so long as immigration rules allow the attraction and retention of the many types of talent needed in the industry.
More services will be developed and operated outside London. More fintechs will have become incumbents in their own right. Consumers and businesses alike will benefit from an increased range of services and level of convenience that will be greatly beneficial to the whole economy.