Unexpected Brexit Beneficiaries: Mobile Payments, Challenger Banks, Alt-Finance

October 16, 2018         By: Steven Anderson

The whole concept of Brexit—a portmanteau of “Britain” and “exit”, referring to its departure from the European Union—has left some giddy and some merely giddy with terror. The new date of departure is March 29, 2019, and with that date steadily approaching, many have begun to analyze just what kind of impact a Britainless EU would have. A new report sent our way from Blue Oceans 

The general attitude, the report notes, is one of uncertainty. The impact of Brexit is largely undiscovered country, and there are no real parallels for what happens when a member nation leaves an economically- and culturally-linked organization of nations. Some banks may look to move to the European continent in what’s being called a “Brexodus”, while some think the financial sector—already one of the world’s mightiest—may benefit.

This uncertainty in turn has sparked some significant caution, which has reduced investments and lending as companies take the ever-popular “wait-and-see” attitude. However, one sector is seeing noteworthy gains here: alternative finance. Things like mobile payments systems, mobile-only banks, and other matter have been steadily gaining ground in the market since around 2008, when the Great Recession hit.

Investors were eager for a sector that wasn’t actively tanking, so they turned to alt-finance operations like those and found some decent returns. In fact, the alt-finance market pulled in about 11 billion pounds sterling between 2010 and 2018. This makes alt-finance a fairly attractive proposition in unstable times, as the sector has already weathered the biggest instability of the 21st century so far.

Additionally, alt-finance has one major advantage over many other financial sectors, particularly in a Brexit case; since much of alt-finance is an internet creature, it doesn’t particularly care about geography. Sure, it may have to live up to a certain area’s security protocol demands or capital requirements or the like, but once it puts those numbers up or proves that capability, it can operate just about as well as any other.

So with the finance sector in Great Britain looking a bit shaky, it’s small surprise to see investors flock toward alt-finance tools that may be better-equipped to weather this latest economic storm front.