25 Nov

'Fintech top of the chain for City of London Lord Mayor Vincent Keaveny' Ticky Fullerton, The Australian

A fortnight ago, Vincent Keaveny became the 693rd Lord Mayor of the City of London.

Donning all the heavy ceremonial regalia, he rode out in a golden horse-drawn coach and banqueted with Boris Johnson.

Lord Mayor Keaveny has just 12 months to make a difference. He is now ambassador for the UK’s crown jewels: its financial and professional services sector just as it emerges from Brexit, a Covid-19 crisis and COP26. And just as the UK looks to Australia for its first free trade agreement with great expectations for growth in fintech and indeed all things tech.

“No other financial centre can deliver what we can,” Keaveny told Australian businesses at an Australian British Chamber of Commerce meeting this week. “In 2020 we continued to be the largest net exporter of financial services in the world, an increase of £1.6bn ($3bn), up from £62.1bn in 2019.”

Keaveny’s role is very different from the well-known Lord Mayor of London – once held by Johnson himself. The City of London is much smaller, the original medieval walled city that makes up the Square Mile.

The first lord mayor of the city was elected in 1189. Just ahead of signing the Magna Carta in 1215, King John, looking for support against the barons of the land, gave the citizens of London the right to elect their own lord mayor. At the time, it was a democratic innovation.

Pomp is a visible but tiny part of the mayoral role. The City of London Corporation has helped lay the foundations for modern banking, capital markets and insurance.

Unusually, this year’s Lord Mayor is a Dubliner in London, as the Irish Times put it.

In his early twenties, Keaveny moved to London planning to gain City legal experience before setting up practice back in Ireland. Instead, he rose to partner at DLA Piper.

“Here I am 23 years later, Lord Mayor of the City of London. My mother said to me at the banquet leaving Guild Hall, surely Vincent that’s enough city experience for anyone by now? She’s probably right.”

Keaveny’s term begins just after COP26 in Glasgow, where the City of London was heavily involved with Mark Carney the former Bank of England chief and now head of transition investing at Brookfield. There has been plenty of debate on what was really achieved, but in years to come, the Lord Mayor says Glasgow will be recognised as the ­finance COP.

He says “$US130 trillion ($180 trillion) of climate investment amassed by the Glasgow Financial Alliance for net zero to deploy across the globe. I think in a few years’ time we will recognise that COP26 was a watershed moment, the deployment of private finance. We have got people around a table now. The big difference at this COP is that private finance was at the table and on the table and we’ve got to keep that momentum going.”

This year Keaveny wants to broaden the ESG ambition to invest for positive social impact. “Focus on the E, beginning to realise transition, start looking at the S piece. To turn a light-green economy to a darker-green economy very quickly introduces ­social considerations, how to make work in a way people can ­afford and cope with significant adjustments.”

He points to Macquarie Bank’s work with Tata Group in India identifying investable oven-ready projects that can attract green ­finance. “We know there is the capital there. We need to make sure the bankable projects are there for the finance world that Mark Carney at GFANZ alliance for net zero was talking about.”

In the English summer, Kea­veny will host a global impact investing summit that he hopes Australia businesses will be able to attend.

Britain’s emergence from Brexit is a work in progress, but the Cassandras spelling doom for the City have been proved wrong. Ten days ago, giant multinational Shell announced it would move its global headquarters from The Hague to London.

“We are always delighted when companies decide to shift headquarters,” Keaveny says.

“We always welcome affirmation. Over the last year or two, the City jobs story is positive.”

He says in 2020 City jobs actually increased by 1.5 per cent and in professional services that rise is 4 per cent, a figure borne out anecdotally in what Keaveny is seeing at DLA Piper and at other law, accounting and consulting firms.

Australia will play an important role in reshaping trade and investment. It is the UK’s second-largest source of investment and the UK is also Australia’s second-largest foreign investment destination.

In the past three years, investment both ways has risen by about $100bn annually. The FTA is expected to be signed before year end and the Lord Mayor believes it will help retain London’s financial strength.

Covid-19 allowing, Keaveny pens in a trip to Australia during the year. “We are reinventing our oldest and most trusted partnership,” he says.

Brexit brings the chance of a free-trade agreement with a bespoke chapter on financial services, where both countries are pioneers. “The opportunity is for young Australians under 35 to come and work and experience the City and build those bonds,” he says. “Off the back of that, we will see increasing levels of financial services and investment services trading between the UK and Australia.” Work on cross-recognition of professional qualifications as part of the FTA is also under way.

Brexit hurt business when UK-based financial firms lost their EU passporting rights to conduct ­financial services. “We have to be honest,” the Lord Mayor says. “There has been an impact particularly in services provided into the EU. The impact is two-way though, we will have to see how this all plays out.”

Keaveny remains optimistic. He says he experienced first-hand while working on euro transactions with London-based international banks that the firms quickly took action. “Those deals all got done and didn’t feel at all different. It is happening, the new relationship between the EU and UK. We are a competitor, not an opponent.”

For Australia, it is the fintech bridge with the world’s leading fintech centre that holds most ­potential. Our open banking system and consumer data right was modelled on the City.

London’s hot credentials in fintech are hardly surprising. Kea­veny says fintech is not a subsector of the tech business but embraced by the financial services industry as a new way of doing business in London, which boasts world class talent, both home-grown and diverse inbound talent. This builds links with financial centres internationally.

The UK regulator’s approach was forward thinking from the start, with new digital sandboxes now operating. “The combination of capital, people, money and regulation all in one place has created an ideal environment to put the UK at the cutting edge of fintech,” Keaveny says. He says peer-to-peer lending, challenger banks, insurtech, regtech, paytech and blockchain are all thriving.

The Australia-UK fintech bridge offers regulatory and logistics support. Several Aussie businesses are setting up UK offices. Black Arrow Financial Solutions is a regtech with its headquarters in Glasgow, and payments business Airwallex has made London its euro headquarters.

Technology in the UK is still at the vanguard, with specialisation across the country that plays into the government’s levelling-up agenda for the regions, where clusters are forming. “In Edinburgh, it is asset management and banking; Leeds increasingly on lawtech planning; Cardiff, insurance and law; Belfast on cyber and regtech,” Keaveny says.

The West Midlands has created a professional services cluster, with fintech in Manchester underpinning future business.

Keaveny’s year in office will go quickly. For his City professionals he is calling for equity of progression as well as equity of opportunity. “I want to champion social mobility and social economic diversity at all levels in the financial services industry, making sure no one is held back or held down. I don’t just want them to get a foot into the door of city businesses. I want them to be able to get up the ladder as well in their careers.”

As for Australia, there are 1.2 million holders of a British passport. “I’d love to see more Australian law graduates coming over and getting a few years’ experience, perhaps taking mother’s advice to heart, keeping that to two or three years and going home.”

That would certainly help Australia.

By Ticky Fullerton, Business Editor at Large, The Australian

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