Successive UK governments have championed greater defence spending, encouraging British start-ups to enter a fast-growing and rapidly changing sector. Founders might expect a permissive regulatory environment, but regulation lags politics, and many firms have run into compliance problems rooted in an earlier view that defence spending was immoral.
Will Morris, co-founder of Eyebrook Technologies, a British start-up focused on surveillance and counter-drone systems, had already secured £700,000 in financing and government support. Confident of opening a bank account, he applied to Barclays after research suggested it was supportive of the defence sector. Six weeks and several email exchanges later, he was denied an account "due to the nature of your business." Other established UK banks and app-based digital banks also refused, despite the primarily defensive nature of Eyebrook's systems.
Analysts say a combination of anti-money laundering safeguards and overzealous Environmental, Social and Governance (ESG) screening has left many promising start-ups unable to access banking. Andrew Sharpe, the Conservative shadow minister for business and trade, has raised the issue repeatedly in the House of Lords, arguing that the sector's default stance is still one of suspicion and excessive caution toward defence.
Morris eventually opened an account with a leading high-street bank, but only after contacting its UK CEO directly. That outcome points to a gap between banks' senior leaders and the ESG frameworks their compliance departments still apply.
Source: Hacker News · Summarized by HeadlinesBriefing