29 September, 2016
Leading financial technology (fintech) centres that are complacent risk losing their dominance in the market to other emerging fintech hubs, a new report by Deloitte said.
The report (62-page / 5.83MB PDF), produced in conjunction with the Global FinTech Hubs Federation (GFHF), named London, Singapore, New York, Silicon Valley and Hong Kong as the "top five" fintech centres in the world. Those centres all have "the appropriate ingredients" to thrive, such as "specialised talent, progressive regulatory bodies, investment capital, [and] government support", the report said.
However, the fintech centres should not take for granted that their "dominance can, or will, continue indefinitely", the report said.
"Each of these centres depend upon a range of contributory factors and conditions that are often subject to changes beyond their control," Deloitte said. "It will therefore be critical for all hubs to continuously evolve their approach to support the growth of entrepreneurs and investors globally."
Deloitte said there is "ample opportunity" for smaller fintech hubs, such as Switzerland, Belgium and Shanghai, to develop their own markets.
The report also highlighted the potential growth of fintech in South Africa.
It said: "The South African startup community is becoming more attractive and palatable to international investors. We expect more foreign venture capitalists to take risks here, thereby creating greater competition with existing South African VCs and ultimately better terms for startup founders. Both Johannesburg and Cape Town are expected to strengthen, building bridges between the two hubs and the global and regional fintech community."
Deloitte said prospective fintech hubs require government support to succeed.
"Our analysis of the global hubs has concluded that strong government support at the early stage of ecosystem formation is essential," Deloitte said. "Once the hub is established, government support, progressive regulations, a culture of innovation and collaboration, and strong financial services and private investors are the ingredients that enable the growth of a fintech hub."
Deloitte predicted that four major US technology companies in Silicon Valley, Google, Apple, Facebook and Amazon, would engage in more "fintech activity" in future. In its report it also pinpointed the factors that make London a world leading fintech hub.
Deloitte said: "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."
The GFHF was set up earlier this year with the aim of creating closer ties between different fintech hubs around the world. It was established by London-based financial technology industry trade body Innovate Finance and SWIFT Innotribe, a subsidiary of global financial network SWIFT which promotes innovation and collaboration in financial technology.
Previously, fintech expert Yvonne Dunn of Pinsent Masons, the law firm behind Out-Law.com, said that international collaboration in fintech was important for the success of the sector.
Dunn said: "Given the fast pace at which fintech is developing, sharing knowledge and best practice across hubs will help to ensure that businesses get the benefit of global experience. Many fintechs are breaking new ground and so access to know-how will help them to develop their businesses within the regulatory environment.”
For further information, please contact:
Ian Laing, Partner, Pinsent Masons
ian.laing@pinsentmasons.com
