The emergence of financial technology, or “fintech” as it has become universally known, has been rapid and widespread. From high-speed trading to cloud infrastructure, it has become the beating heart of the capital markets. But while adoption is ubiquitous and inevitable, New York and London remain the world’s premier fintech centers. With these leading markets well-defined, where will we see the next major fintech hub emerge?
Penny Crosman wrote for American Banker in June 2014 that New York was the leading city for fintech investment, citing that Silicon Valley and London were quickly gaining ground. Fast forward a couple years to September 2016 when Caroline Binham of the Financial Times wrote that UK regulators had become the most encouraging and supportive toward innovation in this sector and that the UK had become “the most fintech-friendly jurisdiction, with the industry generating £6.6bn in revenues and employing 61,000 people in 2015.”
Many believed that it would be a foregone conclusion that London would lose its position as the global epicenter of fintech evolution due to Brexit, as Arjun Kharpal wrote for CNBC leading up to the vote in June. For now, London maintains its place as the world’s leading fintech center, while Singapore has emerged as Asia’s top location and New York continues to garner the highest levels of VC backing. However, with the landscape continuing to progress at rates that even regulators are having difficulty matching, don’t be surprised to see a new region emerge as the de facto number one in the next couple years.
Here is a snapshot into three cities that we could see as the new hotspot for fintech by 2020:
Asia is one of the hottest spots in the financial services sector now, and fintech is no exception. Banks, exchanges and major financial services vendors are piling into Hong Kong to ensure they have a presence in this bustling business center. Regulators across Asia have ramped up their oversight of high speed traders and spoofing in the last year. In order to fight fire with fire, expect them to utilize the fintech options that are becoming increasingly available within their jurisdiction.
While the Germans are perhaps most well-known for their soccer (football) prowess and craftsmanship in automobile engines, they have certainly staked their claim in the fintech arena as well. As Guy Chazan wrote for the Financial Times in July, Berlin could be the city to unseat London on the European fintech throne. It already boasts a strong digital technology presence and the passporting restrictions under Rule 50 could lead to jobs exiting the UK and landing in, you guessed it, Berlin.
The dark horse in the emerging fintech hubs conversation, Sydney is in a solid position to become not only Australia’s top location, but also one of the leading fintech capitals in the Asia-Pacific region. PwC stated in a 2015 report that this sector could contribute 4% of GDP to Australia’s economy. Sydney is already regarded as a great place to do business and with a strong presence of digital and technology companies already established, it seems Sydney is ripe for fintech innovation.
Which of these three cities do you think will take the lead? Which are being overlooked? Let us know in the comments section below or connect with us to ensure that your brand is well established across existing – and future – fintech hubs.
Tags: Berlin, Finance, financial centers, Financial technology, Fintech, Hong Kong, Sydney, technology