In the latest edition of our virtual treasury roundtable series, hosted by Ian Tyler, we had a number of treasurers joining us from a wide range of banks and financial institutions. The discussion focussed on looking at the implications of new Brexit regulations and the sustained low-interest rates. This article runs through some of the key topics which were discussed.
The conversation began by looking at the implications of Brexit and what this meant for banks and the treasury functions within them. The main topic discussed was the ability the UK will have to forge stronger relationships with some of the other key jurisdictions which included India, The US and Australia and any potential deals which are struck will bring many new opportunities with it for the financial services sector.
Another benefit which arose is the increased potential for fintech’s post-Brexit. The UK, in particular London, is already one of the main Fintech centres and all of our guests see this increasing from strength to strength in the near future. The Fintech industry is bringing a lot of new ideas to the market and potentially helping change operating business models in quite a few areas, including Banking.
The final opportunity as a result of Brexit was the possibility of more lobbying. One of the issues with the EU pre-Brexit was that the EU commission was technocratic and you needed to be well resourced to lobby it. The feeling is now that the lobbying process is a lot more open and democratic due to more political and business input and the large benefits that this will undoubtedly bring.
We then moved onto debating the main challenges and threats of Brexit and what this meant for the financial services sector. Obviously, Brexit is going to massively impact UK banks and businesses over the course of 2021, as we are already seeing, although many people think that the worst has already happened as the UK had prepared for a hard Brexit.
The fact that Brexit has happened means that the UK has to come up with its own clear position, however, the long term relationship with China is going to make this difficult. This means the UK may have to work out the impact of any change instance as there is a lot of financial investment which comes from China into the UK.
The final topic covered was the matter of sustained low-interest rates. The main feeling was no one felt we would have ended up with interest rates being kept this low for this period of time. Yet the levels we are currently at are incredibly low and there is the possibility of them going even lower still, so the main question marks were around if they should act now or wait to see if they get any lower.