Brexit takes its place as the big fizzle of the week. And to caption what happened, we might say that this week was a gigantic case of “hurry up and wait.”
No deal on no deal is a big deal, but what’s next beyond the move to push out Brexit’s day of reckoning? The March 29 deadline was fast approaching when Parliament voted down Prime Minister Theresa May’s Brexit plan, and now, uncertainty reigns – just as it always has.
For financial services, and specifically for FinTech, the ripple effects may keep rippling.
As reported, the vote was 412 to 202 on Thursday (March 14th) – 15 days before the March 29 departure date – to delay the withdrawal from the European Union that has been on the books for three years.
Now the process is one where PM May will formally ask for a postponement when she meets with EU officials next week – and, as has been reported, all 27 EU members have to give the green light to approve the postponement.
What’s in limbo now, and what makes Brexit the fizzle of the week, is that an extension is probable, but no one seems to know just how long it would be. As reported in The New York Times and elsewhere, the extension may be voted on by Parliament to last a few months, or it may go toward the end of 2020. For now, there seems to be no second referendum on Brexit – which, of course, may have eventually brought things down yet another path, one where the U.K. would, in fact, stay in the European Union.
As always, the devil is in the details. It’s been widely reported that amid Parliament and May jockeying for power over the process, a softer Brexit may have been in the cards, which would have kept closer economic and trade relationships between the U.K. and the EU.
Then there’s financial services – as Forbes noted a few weeks ago (via Ernst & Young data), as much as $1 trillion in assets has been moved from London to the Continent in the face of all the uncertainty noted above. There are still lingering questions about how tech talent can be developed or nurtured in in London.
But then again, capital is being deployed into the sector, with more than $3 billion coming to FinTechs through the first few months of 2019, up 18 percent from last year, as Innovate Finance estimated. That speaks to some long-term expectations that digital banking and other “sea changes” will continue in financial services (and maybe hasten changes within the U.K.), regardless of the wrangling between the U.K. and the EU over any number of months. It’s a form of “inward” investment, we might term it.
On a grander scale beyond FinTech, uncertainty has shown up in all sorts of ways. Firms do not know what trade will look like – at least not exactly, with tariffs and the impact on labor still unknown. The wrinkle is that no one knows the “when” of what might happen, not to mention the “what.”
Sizzle
Fast Money in the Bank: PayPal launches its Instant Transfer to Bank feature, which lets users move money from PayPal accounts to bank accounts for faster access, a process that took one day under its standard offering. Thus, consumers have the ability to cover bills more easily, and companies can manage working capital more efficiently.
Denim for (Wall Street) Dollars: Levi Strauss’ roots go back over 160 years, and now the company is eyeing an IPO that would mark its first public listing in 30 years. The company may come to market with a $6.2 billion valuation as it seeks to become a lifestyle brand – think sneakers and clothing beyond the jeans scene – on a global stage.
Amazon Sellers: The eCommerce giant lifts its pricing “parity” rule – and now will stop preventing third-party sellers from selling their products on other websites for a lower price. Critics have charged the policy was anti-competitive.
Fizzle
Facebook: Rough day, or days, for the social media giant, which had a partial outage that seemed to span the globe, as billions of users could not access Facebook, Instagram, Messenger or WhatsApp. In addition, the company is facing a criminal probe into data sharing agreements it struck with tech firms such as Microsoft, Sony and Apple.
Apple: Spotify lobs an antitrust suit at the company in the EU, alleging Apple has an anti-competitive process in place that stymies music streaming competitors on the App Store. Get ready for more scrutiny about how it runs its Services business, which, as reported, is a key strategy for Apple’s life beyond the iPhone. Apple, for its part, said Spotify has tried to “sidestep” the rules that other apps follow, and that only a small fraction of apps are tied to the company’s revenue-sharing model.
Wells Fargo: CEO Tim Sloan got a grilling on Capitol Hill amid the lingering scandals tied to sham accounts, auto lending and mortgage lending. Lawmakers seemed to mull whether Wells is simply “too big to manage” and should be “downsized,” according to reports. Rep. Maxine Waters has called the CEO’s $2 million bonus “outrageous” and called for his removal.
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