A comprehensive study of fintech hubs worldwide by Deloitte finds London is still the global top dog with Singapore hot on its heels. With many other hubs accelerating their development, it is clear London’s leading status will face greater competition going forwards.
The half yearly snapshot of the industry by Deloitte says that London, one of 20 “old hubs” analysed by the accountant, boasts the world’s largest financial services sector supported by a booming tech sector.
The study adds: “London’s 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.
Singapore, meanwhile, is a leading international financial centre in its own right. Its fintech community has benefitted from the island state’s government providing strong support for the sector, with S$225m committed to the development of fintech projects and proofs of concept.
Old and new hubs
The Deloitte report, Connecting Global Fintech: Interim Hub Review 2017, takes into account six key features that help to create a healthy fintech hub: access to technical expertise, proximity to the customer base, regulatory framework, government support, innovation culture and international diversity. London notched up the highest scores in all categories except for the last two.
Among the other 44 fintech focused cities considered by the study Chicago – one of 24 “new hubs” analysed by Deloitte – is especially notable for being the highest new ranking. It achieved an impressive fifth place in the ranking, pipping Hong Kong but just lagging behind New York and Silicon Valley placed third and fourth respectively.
Deloitte says that Chicago acts “as the epicentre for all fintech activity in the Midwest, representing well over 20,000 financial institutions”. It is home to two fifths of the top business universities in the US and over 6% of the Chicago workforce are focused on the financial ecosystem contributing to its already significant talent pool. “With government support, Chicago companies are able to quickly innovate to create ground-breaking technology,” says the study.
The outlook for Chicago is bright, with Deloitte expecting over the next 12 months to see state and local government partnering with the private sector and NGOs to push for greater adoption of blockchain and the creation of an innovation friendly environment. Later this year Chicago plans to launch Currency, a centre of excellence that will support and development of an innovation friendly regulatory stance.
Stockholm and Tokyo were among the other new entries, pegged jointly in eleventh place. Copenhagen, Edinburgh and Oslo also made their debuts, racing into the top 20.
In highlighting the key regional themes uncovered by the study, Louise Brett, UK fintech lead partner at Deloitte, says that new European hubs tended to agree that there is good access to talent in their hubs. On the other hand, most of these new hubs rated regulation in their territory negatively.
Asia-Pacific hub representatives were rather more positive about their regulatory environment compared to their European counterparts. “Over the last year, we have seen very positive developments from regulators across Asia and the pace of change there has been extremely encouraging,” says Brett, pointing out that of the 16 regulators who have either set up or have committed to setting up regulatory sandboxes, seven are in Asia.
She adds: “Asian regulators, moreover, have also been proactive in cooperating with other regulatory bodies outside of their region…China, South Korea, Hong Kong, Japan, Singapore, Australia and India have all signed international cooperation agreements with other regulators; Singapore’s [central bank] MAS has signed more fintech cooperation agreements than other regulatory bodies in the world. Although the tangible outcomes of these agreements largely remain to be seen, cooperation between regulators globally has undeniably become a trend.”
Other key themes to emerge from the study include fintech developments in Africa continuing to be concentrated around mobile and social payments. “Highly successful fintechs in Africa are rare as low levels of government and regulatory support and lack of quality infrastructure continue to be barriers to scaling,” says the report.
In the central and South America region, Brazil leads the pack by way of investment and number of fintechs and much of the activity is concentrated in Sao Paulo.
In North America, while Silicon Valley and New York continue to be the indisputable top fintech hubs in the USA, and Toronto in Canada with 80% of the Canadian fintech activity, Deloitte has seen a number of other emerging hubs including Chicago and Charlotte, North Carolina.
Deloitte plans to publish the full year Connecting Global FinTech Review 2017 at Sibos in October.