As Money2020 Europe, the largest fintech event in Europe, winds down this week, we take a deeper look at what makes a successful fintech hub. The Nordics are competing for the mantle of best fintech ecosystem. Should London, the current frontrunner, be worried?
The UK currently occupies one of the top positions within fintech hubs, but they cannot afford to become complacent. Despite having a well-rounded ecosystem and a strong competitive advantage in its government and regulatory policy they face increased competition from other regions eager to catch up.
Second to the UK, Singapore is increasingly active in fintech policy and have established supportive initiatives including a £100 million Financial Technology and Innovation Scheme to increase their attractiveness as a place to set up shop.
Closer to home, the Swiss Financial Market Supervisory Authority is adapting its regulations for the digitalisation of the financial sector. Included in the policy are new rules on online identification of bank customers. The authority also wants to simplify licensing procedures for innovators. A recent government report on the state of UK fintech points out:
“Despite the UK’s leading position as a global capital for fintech, its long-term position is not assured, as other regions accelerate policy initiatives, specialist regions emerge, and China emerges as a fintech juggernaut.”
5 key lessons for aspiring fintech hubs
I have drawn up my key recommendations that, in my opinion, should be seriously considered for any region or city that wishes to become more attractive as a fintech destination.
1) The establishment of a fintech “delivery body” responsible for the implementation of government policy initiatives to ensure good intentions result in action.
2) Policy change within financial regulatory bodies ensuring they take a proactive and more consultative approach towards fintechs to include the establishment of initiatives to compete with Project Innovate.
3) Establish working and community hubs and consider making unused office space available for fintech entrepreneurs.
4) Encourage collaborations between academia, fintechs and financial service providers.
5) Establish programs to improve fintech access to growth capital and consider tax incentives to drive investment into the sector.
With competition already fierce, we are seeing a greater emergence of specializations designed to create focused regional centers of excellence, and this is a trend that I expect to continue. Examples include Israel’s focus on cyber security; Benelux’s focus on payments; Dublin’s focus on fund administration, Malta and the Isle of Man’s focus on crypto currencies; and Estonia’s focus on financial identity.
Those cities wishing to catch up in the race or strengthen their positions could do well to find their own edge that will set them apart form the already attractive alternatives.
Read more from Omar Shaikh at the Cocoa Invest blog.