The UK and Singapore regulators are joining forces to form a so-called “fintech bridge” in a bid to both bolster Singapore’s fintech credentials and strengthen UK links to Asia. The Nordics, which are competing with Singapore to become the next fintech hub, will surely be left in the dust.
In a joint statement with the UKs Financial Conduct Authority (FCA) and HM Treasury, the Monetary Authority of Singapore’s said the tie-up between regulators – the first of its kind – will help fintech firms and investors “access the Asian market and expand to Singapore, as well as attracting Singaporean Fintech companies and investors to the UK.”
The UK already has a dominant role on the global fintech landscape. It’s own data claims that the UK fintech industry generated GBP 6.6 billion in revenues last year, creating 60,000 jobs.
The new join initiative will help put Singapore, which has invested $164 million in a 5-year in fintech plan, ahead of the likes of Hong Kong and other Asian fintech hubs, and miles ahead of the Nordics.
The Nordics have unveiled ambitious initiatives to bolster fintech growth, hoping to build on their educated workforce and innovative financial sector. Singapore’s bid to become a fintech hub has been compared to the Nordics in the past, as both regions are thought to suffer from high risk-aversion, attributed to the dominance of Janteloven in the Nordics, and the idea of “losing face” in Singapore.
Like the Nordics, Singapore is a small country with few inhabitants, and has no choice but to invest globally. The fintech bridge will give Singaporean startups a running start and bring even more international investment to the region.
Fintech startups in Nordics struggle to grow
Meanwhile, although fintech startups in the Nordics have been growing in number and diversity of services, they still have major barriers to growing their businesses. A report by BDO and Danske Bank on the state of the Nordic fintech industry, cited lack of market reach and access to capital as major barriers.
New fintech companies in the Nordics must fight an uphill battle for market entry. As Christopher Hernæs, VP at Sparebank 1 in Norway explains:
“Startups will never have the distribution power. Banks have the market reach. Market reach is very difficult to achieve, especially in financial services. A lot of fintech companies are delivering stand alone payment solutions, and they have to close down or change their strategy to partner with banks instead of going against them.”
The report urges better collaboration between banks and startups, which will help banks keep up with new technology and give startups market reach and capital. But to build a truly global fintech hub, the Nordics must take greater action on implementation of policy changes within financial regulatory bodies, establish programs to improve fintech access to growth capital, and consider tax incentives to drive investments to the sector.
Additional reporting by Andrew Woodman for Nexchange.