It has been four months since the Brexit trade deal came into effect between the United Kingdom and the European Union. The deal, in common with other free trade agreements, does very little to support the export of financial services from the U.K. into the single market. As a result, spring has seen financial services firms, including those in financial technology adjusting to different trading relations with the EU, while also managing the ongoing COVID-19 restrictions.

Most notably, U.K. financial services have lost their automatic rights to service EU clients from their U.K. base, using the so-called passporting rights that U.K. firms had during the time as a member state. Passporting has been replaced by equivalence decisions. However, this is not a fair replacement. Equivalence is a unilateral decision granted by the EU in areas of finance, where it recognizes the U.K.’s regulatory framework to be equivalent to its own. These decisions can be withdrawn with 30 days’ notice and do not cover the whole financial services sector. For example, retail bank lending and depositing are not subject to equivalence decisions.

To date, equivalence has only been granted to the U.K. in two areas deemed to be questions of systemic financial stability. As a result, U.K. financial services are currently operating with less EU market access than some of their key competitors, including the United States and Singapore.

Related: Fintech in the United Kingdom after Brexit

Several financial institutions have responded by relocating parts of their business to other European financial centers, including Paris, Frankfurt, Amsterdam and Dublin. Latest estimates suggest that more than 440 financial institutions have undertaken such moves, involving around 7,500 jobs out of the United Kingdom.

In addition to examining the implications of Brexit on existing business models in financial services, it is equally important to consider the opportunities for future growth that currently exist for U.K. finance. Indeed, the political discourse surrounding Brexit has made much of the opportunities for the U.K. in terms of “taking back control.”

The U.K. and digital finance

During the Brexit trade negotiations of 2020, it was not clear what the U.K. would choose to use its new-found regulatory sovereignty for. However, early indications have surfaced since the deal. It is clear that fintech and digital finance, alongside green finance, is an area that the U.K. is seeking to prioritize for development to make up the business that has been lost to the EU. In the case of fintech, this clearly fits alongside a wider interest in tech-driven economic growth by the government.

Reflecting the importance attached to digital finance, it has been one of the areas that has seen the most political support and policy announcements since the trade deal came into effect. For example, a U.K. listing led by former EU Commissioner of Financial Services Jonathan Hill sought to respond to the fact that U.K. tech companies increasingly choose New York as their primary listing venue.

The listing review also argued that the innovative approach to regulation of fintech through the Financial Conduct Authority’s, or FCA’s, regulatory sandbox allowed for more rapid and regulatory change. Since fintech represents one of the “growth sectors of the future,” where the U.K. “is already a leader in Europe,” there must be further development post-Brexit. In early April, Chancellor of the FCA Rishi Sunak responded by announcing at Fintech Week a new FCA “scale box” to support the growth of fintech, based on the success of the regulatory sandboxes in the United Kingdom.

Related: UK’s FCA crypto derivatives ban may push retail investors to riskier grounds

Echoing the wider policy interest in fintech, this spring has also seen the publication of the “Kalifa Review of UK Fintech.” This seeks to capitalize on U.K. leadership in fintech and makes recommendations around capital and skill requirements, among others, for the sector.

However, these reviews also point to areas of challenge and uncertainty, as well as opportunity, for U.K. fintech post-Brexit. One of the most notable areas in this respect is the attraction of highly skilled international talent to work in fintech in the United Kingdom. The implications of Brexit for this, in terms of both international migration and shorter forms of international business travel, are currently unknown, since business travel has been largely shut down due to the COVID-19 restrictions.

U.K.’s financial centers outside of London

Given widely held concerns about the technical skills emanating from the U.K.’s education system, examining how the new Global Talent visa operates in practice will be important in assessing post-Brexit labor markets for U.K. fintech. Similarly, in terms of shorter forms of business travel, as and when the pandemic’s travel restrictions ease, more will be known about how Brexit, as well as COVID-19, have changed the landscape of the financial services’ business travel.

It is also important to explore the implications of Brexit for fintech not only within but also beyond London, particularly given the government’s focus on “building back better” through leveling up regional economic growth post-Brexit.

Again, there are opportunities and challenges for fintech here. The Kalifa Review identified ten clusters of fintech activity across the U.K. that have “the most potential to grow and develop further,” including Edinburgh and Glasgow, Manchester and Leeds, and the North East of England. Such a focus appears to be yielding results, with Goldman Sachs announcing the opening of a major technology hub in Birmingham earlier in April. However, maintaining the attractiveness of these locations, particularly in terms of cost, will be important as other locations within Europe, such as Poland and Portugal, increasingly seek to develop their own, cost-competitive financial clusters.

Similar to the history of London as a financial center, the U.K.’s fintech sector has shown considerable regenerative capacities, adapting its focus to the political and economic landscape of which it is a part. It is clear that there is strong political support for the sector in post-Brexit Britain, and the sector itself will need to respond accordingly as more detail emerges concerning the U.K.’s financial services priorities post-Brexit.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sarah Hall is a senior fellow at The U.K. in a Changing Europe and professor of economic geography in the faculty of social sciences at the University of Nottingham. She is the author of Global Finance (Sage, 2017). She is currently researching the impact of Brexit on the U.K.’s financial services sector.

The opinions expressed are the author’s alone and do not necessarily reflect the views of the University of Nottingham or its affiliates.