November 25, 2016
While we have been brushing through the world’s hottest FinTech hubs, we haven't really looked at them in a comparative manner. Meanwhile, every hub is unique and carries hallmarks of its history of growth and development affected by distinctive forces. Those forces shape unique strengths and weaknesses and determine the course of future development and types of innovations that will be bred in a particular hub.
While there is plenty on a granular level of research and the LTP Team has individually covered some of the hottest FinTech ecosystems around the world (Israel, Silicon Valley, New York, Singapore, Hong Kong, Switzerland, Germany, London, etc.), it's important to understand where those hubs stand on a global level based on a range of innovation-inducing metrics. The Global FinTech Hubs Federation recently released a report called Connecting Global FinTech: Hub Review 2016, comparing 21 global FinTech hubs based on a range of parameters.
Out of 21 hubs reviewed in the report, the top five positions are held by London, Singapore, New York, Silicon Valley and Hong Kong.
As commented by Louise Brett, Deloitte Lead Partner, The top five Hubs emerging with an Index Performance Score of 25 or less were London, Singapore, New York, Hong Kong and Silicon Valley. This is no surprise as their leading position is based on decades of evolution as global financial centers, or in the case of Silicon Valley, in technology.
These hubs already have the appropriate ingredients (i.e. specialized 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.
Overall, out of 21 hubs, ~43% are in Europe, ~24% are in Asia and ~33% in the rest of the world. Hubs were compared based on several environmental indicators: government support, innovation culture, proximity to customers, proximity to expertise, foreign startups and regulation.
Source: Global FinTech: Hub Review 2016
Gold - London
Despite all the political and economic uncertainty and sometimes skeptic expectations regarding the future of FinTech in London, the megapolis confidently holds the position of the hottest global FinTech hub. The study suggests that London has the world’s largest financial services sector, supported by a booming tech sector.
The ecosystem has the Fin of New York, the Tech of the US West Coast and the policymakers of Washington, all within a 15-minute journey on public transport. These factors make London one of the greatest connected global cities in the world with the key ingredients for digital success: capital, talent, regulatory and government support and demographic diversity.
Between 2010 and 2015, out of $9.8 billion of investments in FinTech across the European region, 55% are invested in UK FinTech. In 2014, $66 million were invested in London FinTech, making it the third leading financial technology location worldwide at that time after Silicon Valley ($1.5 billion) and New York ($600 million).
London is ahead of the world with the adoption of contactless payments – nearly 50% of London’s population already has contactless debit or credit cards which can conduct transactions under £20 without the need for a PIN number or a signature. Moreover, contactless payments have been in use in London buses since December 2012. There are currently about 70,000 contactless payments being made on buses in a day.
London is hosting some of the most successful startups internationally, among which are Monese, Osper, TransferWise, Currency Cloud, RateSetter, Elliptic, Nutmeg, Worldpay, Zopa, Kantox, LendInvest and much more.
Silver - Singapore
Singapore is a leading international financial center and a serious contender for the global number one spot in FinTech. Government support for FinTech is strong with S$225 million committed to the development of FinTech projects and proofs of concept. Other initiatives include the Regulatory Sandbox, Cloud Computing Guidelines, Strategic Electronic Payments, FinTech Office, MAS Innovation Lab, International Technology Advisory Panel and Talent Development.
Singapore is one of the gems of the global financial services industry ecosystem with ~200 banks with total assets of $2 trillion having operational headquarters in Singapore. Global financial institutions like Mastercard, UBS, DBS Bank,OCBC, Wells Fargo and Citigroup are launching their innovation labs and accelerators in Singapore along with significant investments in the ecosystem.
Not only is Singapore known for its conductive business-friendly environment with extremely supportive government, but also for hosting some of the most interesting blockchain companies playing a vital role in global blockchain ecosystem.
Bronze - New York
As a leading global financial hub, New York has some of the largest and most established financial services institutions actively investing in, and collaborating with, a myriad of FinTechs. With Wall Street having both the largest capital base and greatest need for FinTech innovation, the best technology and engineering talent have come together to create a vibrant and well-funded ecosystem within walking distance of the market they serve.
New York is one of only two (second being the Silicon Valley) hubs representing the US on the global map and deserves special attention. The hub even outperforms Singapore in such parameters as proximity to expertise and foreign startups and outperforms both Singapore and London for innovation culture.
New York has been at the forefront of addressing the growth of cryptocurrency startups segment with BitLicense. Last year, New York State issued extensive new rules for companies that operate in virtual currencies. The Department of Financial Services stated that the new rule is the first comprehensive guideline related to regulation of digital currency firms published by any state. The final set of rules was announced by Mr. Lawsky at the 2015 BITS Emerging Payment Forum. The rules state that digital currency companies operating in New York State have to apply for a BitLicense from the Department of Financial Services.
Source: Global FinTech: Hub Review 2016