March 29th, 2019. A much-anticipated date, though one that now holds little meaning. At the most recent summit in Brussels, both the UK and the EU agreed to postpone Brexit, with the two new possible dates of exit laid out as 12 April, or 22 May. It’s been almost impossible to escape the ever-changing Brexit headlines since June 2016, and they’ve been anything but consistent. Not only is the general public in the dark on what’s to come, but so seemingly are the government themselves. The UK’s departure from the EU will have lasting impacts in an abundance of areas, and the financial services sector will be one of these affected most noticeably due to the UK's status as one of the global finance centres. The most widely discussed concern is the risk of no deal, but this is only the tip of the iceberg when honing in on the challenges that the UK’s banks and financial services will face.
Last week at the Deep Learning in Finance Summit, experts working in technology, finance and government came together to explore some of the possible outcomes and challenges that the financial industry will face post-Brexit. The panel discussion focused on assessing the impact of Brexit on the development, diffusion, and governance of emerging technologies including Deep Learning and AI both within the U.K, on the European level and internationally.
Joining the panel was Val Alsop, Artificial Intelligence and Data Grand Challenge Lead at UK Department for Business, Energy and Industrial Strategy; Johann de Silva, Deputy Head, Science and Scenarios at UK Department for International Trade; Jaya Handa, Privacy Director at Liberty Specialty Markets; Jacek Wieclawski - Markets Innovation/Future of AI in Financial Services, Working Group Member at Rabobank/World Economic Forum and the moderator of the discussion, Stefania Spezzati, Finance Reporter at Bloomberg.
The discussion kicked off with Stefania asking the panellists where they see the biggest challenges arising in the wake of Brexit, and if they thought they would be impacted both on a personal level and in their current roles. Jackek, who used to be a trader, is now bringing blockchain and AI solutions to this area and works on how to get insights from big data to give traders a better view. He explained that Brexit is a massive problem for him and his team:
“The main problem we’re facing is talent. We’re struggling to attract people coming from the European Union and we need to attract these experts.”
He explained that the uncertainty is dissuading people from exploring the options that the UK has to offer, and in turn, this is giving the competitive advantage to other countries. “The USA isn’t good at this either with Trump, but Europe may end up winning this game. The global fight for talent will only intensify and it might be quite brutal. It’s hard to find really talented people - banking isn’t as sexy as it used to be, and it’s not a wonder why people are picking big tech companies, but finance is amazing because we sit on live data.”
Val also stressed the importance of attracting global talent into banking and fintech in the UK to stay ahead of other countries and said that skills are a key area they’re addressing at the moment. On January 31st, the UK Department for Business, Energy and Industrial Strategy announced their new skills package which will offer PhD spaces focusing on AI where they bring people from across the world into the UK to try and address this challenge and close the gap.
Stefania went on to ask the panel where some of the biggest differences are between the financial sector in the UK and overseas, and Jaya, who travels to Boston monthly, explained that the biggest difference in the U.S. is between the startups and the multinationals. “In the huge companies talent is still a problem but we have the money to find talent from across the globe, but UK startups really struggle because of the fear of Brexit and the talent shortage. Yes, the UK government are doing things to help, but so are the French government, so there’s lots of competition. The fear of what will happen post-Brexit is affecting the startup culture.” Jackek interjected by explaining that the critical mass of talent is here, not in the rest of Europe and “it would be such a shame to lose this.”
We hear time and time again that ‘data has no borders’, and this is all very well, but currently in this time of uncertainty we don’t know if this will remain the case. We don’t know the outcome of Brexit and how we’ll be able to share data cross-EU. Jaya explained that currently, we can do this and work on projects with other European countries, “but from 29th March (tbc!), this doesn’t stand any more and this could cause huge problems and actually create data borders.“
Whilst most companies are considering the immediate impact of Brexit, Johann spends his time looking further ahead - 2040/50. For the future of fintech, one of the biggest impacts will be emerging technologies. Taking a look at Brexit from this perspective, he explained that it’s not too much of a concern for them: “I think we know about some of the really big challenges that are coming up in the way that the world will change in the movement of information and bouts of economic power and climate change, so starting from that point of view these are the big challenges we’re really focusing on at the moment, so I’m lucky enough not to have to worry [about Brexit] too much.”
Turning the conversation towards budgets, we heard from Jackek that this isn't a huge problem, the money is still coming in for now, but regulation could still be the thing that gets in the way of the UK continuing to thrive once we’ve departed from the EU - “In finance we have to be really careful what we do with our AI modelling because of ethics - there’s no guidance so we need to work closely with startups and other companies to ensure everyone is behaving ethically.” Val closed the discussion by explaining that “outside of the sensitive issues we’re working on, we have a lot of forward facing discussions. AI is a global trend, and regardless of Brexit they the development and progression of AI won’t go anywhere. Companies, small or large, are focusing on the future and the skills and infrastructure we’re upgrading across the country.”