As we know, FinTech is a fast growing sector that is dramatically changing the world of financial services and is putting the skids on traditional companies, which are losing an increasingly large share of this business to innovative enterprises that effectively combine the spheres of finance and technology.
Again and again, when investigating the biggest FinTech hubs around the world, there is always one common element: the strength of the local financial industry. There’s quite a simple reason for that, financial technology thrives on disrupting, partnering and innovating within traditional financial markets. Deloitte, one of the world’s leading professional services networks, has this year drafted a report on the world’s best cities in which to launch a FinTech firm, taking into consideration a database of around fifty hubs scattered in many technological centres around the world.
According to the criteria used by Deloitte – which include doing business, financial competitiveness and innovation – the best cities in the world for Fintech are London and Singapore. Technology, capital, human resources from all over the world, and institutions ready to support businesses: features similar to those of Singapore, the city-state which this year has invested over 160 million dollars of public funds in the development of Fintech projects, making it the best FinTech hub in Asia.
London, therefore, has the ability to attract top-quality talent from around the world through higher than average salaries, good quality of life, easy access to basic amenities (healthcare, social and cultural attractions, public transport, etc.) and the promise of career progression, especially within the finance sector. The UK has very favourable fintech policies with strong support from the Financial Conduct Authority (FCA). In addition, it has encouraging tax incentives with a variety of government-backed programs aiming to promote competition and innovation.
New York City, on the other hand, is supported by one of the most established financial systems. As the report says, “With Wall Street having the greatest need for FinTech innovation, the best technology and engineering talent have come together to create a vibrant and well-funded ecosystem”. America also takes home fourth and fifth place, occupied by two other hubs of excellence: Silicon Valley and Chicago. Situated in the San Francisco Bay Area, California, Silicon Valley is synonymous with technology innovation, which is now aimed at FinTech. As Deloitte points out, in the future we will likely see increased FinTech activity by GAFA (Google, Apple, Facebook, Amazon, all headquartered in Silicon Valley).
Besides, Chicago acts as the hub for all FinTech activity in the Midwest, representing well over 20,000 financial institutions: over 6% of the Chicago workforce are focused on the financial ecosystem.
Next, Deloitte allocates sixth place to Hong Kong: it is Asia’s largest financial centre, and this provides immediate attraction for FinTech, also due to its strategic proximity to China.
The highest ranking European city, after London, is Zurich. Put on the seventh place, according to Deloitte it is “the largest financial centre in Switzerland, a country famed for its quality, reliability, security and stability” – ideal conditions to strengthen the business fabric, also in the FinTech field. Frankfurt and Toronto complete the ranking’s top ten positions: the former hosts the largest Stock Exchange in Continental Europe and boasts an enviable system of start-ups, along with financial institutions and talents; in the Canadian city, instead, FinTech is growing exponentially, as evidenced by the fact that 80% of the FinTech start-ups in Canada are Toronto-based.
I will add a few more words about the cities which, in my opinion, deserve to be mentioned as well, such as Stockholm. The Swedish capital already attracts one fifth of fintech investment in Europe and has a record of creating high-value technology businesses from scratch including Skype. The Swedish government has invested heavily in infrastructure such as high-speed internet connectivity since the 1990s, and the city has a well-educated and internationally minded workforce. Successful fintech firms based there include Klarna and iZettle, and the city is poised to benefit further from a likely exodus of fintech players from London after the UK leaves the European Union.
Nest city to be paid attention to is Taipei. In December, Taipei reinforced its standing as an emerging Asian fintech hub when the Taiwan parliament approved a sandbox approach to fintech research and development projects. Taipei is seen as an attractive base for companies such as hers, thanks to its large and affordable pool of talented engineers, but believes the sandbox initiative reinforces Taipei’s attractiveness. In addition to being Taiwan’s capital, Taipei hosts some 2,000 traditional financial institutions as well as fintech players such as Fugle, Maicoin and Airsig. Recent crackdowns on cryptocurrencies and ICOs by the authorities in China and South Korea have strengthened Taipei’s position as a regional cryptocurrency trading hub,
As we see, the FinTech community is expanding fast, settling down in the bustling, cosmopolitan cities. Which hubs will be mentioned in the ranking next year? The question remains open so far.