Is London Still the Fintech Capital?

By Russell Bennett, CEO at Fraedom

While the focus tends to be on the traditional fintech hubs, such as London, Singapore and San Francisco, as well as some of fintech’s rising stars like New Zealand, Australia and the Netherlands, emerging markets are also changing the game. Despite London having been deemed the ‘fintech capital’, the numerous fintech developments we are seeing in other countries are challenging this perception and increasingly we are seeing new fintech hubs emerge around the world. So, is London still the fintech capital of the world or have other large and emerging markets now caught up and are ready to take this title?

Traditional fintech hubs

Russell Bennett, CEO at Fraedom

London has long been considered the fintech capital and you can see why as in the first quarter of 2017, London saw $421 million invested in its fintech industry while Berlin, in second place, received $140 million and Stockholm $96 million. That said, 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. 

There is no denying that the traditional hubs and London in particular remain strong, however, can they continue to compete with the rising stars?

The rising stars

While Singapore has been seen as the Asian market to beat, China has emerged as one of the fastest growing fintech sectors and is home to three of the top five FinTech100. There are a number of factors helping China here, firstly the Chinese Government has been very active in commissioning innovative initiatives, while its banking regulators’ involvement has been moderate; secondly, domestic investors have been able to provide large amounts of capital. In addition to this, China has the world’s largest consumer base, as well as a significant number of underserved SMEs ripe to benefit from the innovation fintechs provide.

Yet, this demand isn’t only coming from businesses, as 85% of all payments in the country are mobile payments and a quarter of the Chinese population are fintech users, approximately 350 million people. Arguably, the explosion of fintech in China is inspiring other Asian markets to develop their own fintech sector and robo-advisors, digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision, are expanding more rapidly in Asia than anywhere else globally.

“There is no denying that the traditional hubs and London in particular remain strong, however, can they continue to compete with the rising stars?”

The fintech landscape in Australia and New Zealand is also 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, Uber for Business in Australia and New Zealand 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. Additionally, the NAB Ventures arm of the organisation has a fund dedicated to investing in fintechs and startups which has doubled in size from $50 million to invest over three years to $100 million.

Emerging markets

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. These countries have rapidly developing fintech hubs, as well as supportive regulatory environments, that could help them cement strong positions in the broader fintech scene. So, while they’re not ready to snatch the title of ‘fintech capital’ just yet, they are seeing a great deal of progress and are likely to see significant growth in the coming years. 

Microfinance, a type of banking service that is provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services, has also become an emerging market phenomenon. In Bangladesh it has become the dominant form of service delivery, with a reported approximate 23 million borrowers in a country of roughly 150 million people. Its popularity is also notable in the Philippines and India, the latter of which has seen fintech adoption at 87% which EY puts down to traditional financial services companies in India having entered the fray.

The state of play

There is no denying that fintech is on the rise the world over and while the UK and US were once seen to be paving the way, the market is growing rapidly in Asian countries in particular. According to research from PwC, based on investments and number of startups China and India are the largest fintech ecosystems and investments in Asia Pacific fintech totalled US$14.8 billion last year.

However, this is still behind Europe which saw investments of $26 billion in just the first half of 2018 with the UK gaining over $16 billion of this. Therefore, it seems that even if London is no longer the fintech capital of the world, it’s certainly among them, with San Francisco appearing to be its closest rival. That said, geo-political uncertainties, such as Brexit, could see some UK-based fintechs begin to look elsewhere for a base, but only time will tell. 


  • Editorial Director of the The Fintech Times

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