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Is London still the fintech capital?

Future banking
By Russell Bennett, Chief Executive Officer

Although fintechs are typically associated with the traditional hubs of Singapore, San Francisco and the ‘fintech capital’ of London, rising stars like New Zealand, Australia and Canada are making a name for themselves, too. Operating around the world has given us a vantage point through which to not only watch fintech markets evolve and new ones emerge but also to play an active role in this. So, is the idea that London is the ‘fintech capital’ of the world outdated as these new markets go from strength to strength?

Traditional fintech hubs

London’s position as the fintech capital has been strengthened by strong investment in recent years seeing $421 million invested in its fintech industry in the first quarter of 2017 compared with Berlin’s $140 million, for example. While this year, the UK as a whole is attracting investment at a record rate, with $2.9 billion raised in the first six months of 2019 and London accounting for 90% of investment flows. 

Yet, despite London’s continued fintech success, San Francisco is now home to a growing number of fintech unicorns, private companies valued at more than $1 billion, currently boasting nine to London’s seven. Meanwhile, Singapore’s fintech market is also continuing to grow, in fact, its adoption of fintech has almost tripled in the country in the last two years. Much of this success can be attributed to Singapore’s supportive regulatory environment and the fact that despite being a relatively small business-to-consumer market by size, it is a hotbed for innovation. This has seen startups and businesses use it as a gateway to south-east Asia.

The contenders

The fintech landscape in Australia and New Zealand is going from strength to strength, with fintechs playing a vital role in the development of innovative new services that are currently unavailable in the UK. For instance, a project we’ve been involved with for Uber for Business in Australia and New Zealand now allows corporate transactions to be automatically processed by internal finance teams. The region is also benefitting from new initiatives from National Australia Bank (NAB) which include the launch of an online portal to facilitate collaboration between NAB and fintechs.

According to Business Insider Intelligence’s Global Fintech Landscape report, countries such as Brazil, Israel, and Canada are likely to play a big part in the global fintech ecosystem in the future. The  Canadian fintech sector has seen significant growth in recent years with research from PwC finding that 62% of Canadian financial institutions were are actively involved in partnerships with fintechs in 2017 and 88% said they would increase partnerships going forward. Canada also benefits from a supportive regulatory environment that could help it cement a strong position in the broader fintech scene.

The changing landscape

While the UK and US were once seen to be paving the way, there’s no denying that exciting fintech developments are now taking place globally. So, while it seems that London is no longer the fintech capital of the world, it’s certainly among them, with San Francisco appearing to be its closest rival. However, as emerging markets continue to benefit from supportive regulatory bodies and new trends continue to appear, it’s definitely an exciting time to be a fintech in the growing landscape.

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