London remains the globe’s top FinTech hub, according to a new report. The city benefits from a strong financial market presence, a high innovation index score and a good placement in doing business. Singapore takes the number two spot, followed by New York and Silicon Valley.
Incumbent financial institutions have, in recent years, become increasingly concerned about the propositions being developed by financial technology (FinTech) entrepreneurs. The nascent industry, which last year saw investments totalling $19 billion, is leveraging low barrier technologies to create financial services offerings that may disrupt the markets of tradition players, or open up whole new ways of doing business.
The development of FinTech propositions remains in its infancy, although a swathe of successful companies has so far formed, from Venmo in Payment System to Kickstarted in Venture Capital. To support startups, some of which may become disruptive unicorns, a range of support networks have come online – including FinTech Hubs.
In a new report from Deloitte and All Street Research, 21 of the major FinTech hubs around the world are analysed in terms of three key ‘business indices’, with data sourced from the Global Financial Centre Index (GFCI), Doing Business 2016 (DB) and the Global Innovation Index (GII). A lower Index Performance Score suggests that the Hub is more conducive to the growth of FinTech.
Global hub ranking
According to the result of the analysis, the top equal performers is the UK, followed closey by Singapore, with a rounded score of 10 each. New York takes the number three spot, on 13, while Silicon Valley comes in at number four on 19. Hong Kong closes off the top five with a score of 23. The report finds that Singapore has managed to improve its standing by one since last year, overtaking New York, largely due to considerable government investment (S$225 million).
Remarking on the performance of the top five hubs, Louise Brett, Deloitte Lead Partner for UK FinTech says, “This is no surprise as their leading position is based on decades of evolution as global financial centres, or in the case of Silicon Valley, in technology. These Hubs already have the appropriate ingredients (i.e. specialised talent, progressive regulatory bodies, investment capital, government support, etc.) and the strong collaboration within the ecosystem that is required to develop leading global FinTech sectors, and which are capable of innovating across the financial services and technology landscape.”
South Korea takes the number six spot, on 27, followed by Switzerland with a score of 42. Frankfurt takes the number eight spot, with a score of 43, while Sydney, on 49, and Canada, on 50, take the number nine and ten spots respectively. The lowest performers, in the top 21, include Kenya (261), India (238), South Africa (184) and Mexico (152).
Regarding the ‘low scorers’, Brett adds, “The final grouping consists of the four countries with scores above 150, namely Mexico, South Africa, India, and Kenya. These Index Performance Scores are however not necessarily negative indicators for the development of a FinTech sector in those countries. Factors that hamper growth in mature markets may indeed be the lifeblood of growth in developing markets; limited regulation of the financial services industry, and low penetration of traditional banking and insurance services is more conducive to FinTech growth.”
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