New technologies such as big data, AI and blockchain can help to transform the way that financial services are delivered, making them cheaper, more efficient, more convenient and more inclusive.
‘Fintech’ is therefore a hot topic around the world, with a Fintech Global survey reporting that investment in the sector almost doubled to US$38.9bn between 2014 and 2017. So it’s no surprise that many countries around the world have ambitions to create and grow a fintech sector. But what do they need to do to be successful?
Click on each of the six key findings illustrated below to find out.
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The concept of a sector hub in economic development is well established – having everything you need in one place supports and accelerates innovation. It enables interaction, learning and building of networks between innovators, investors and regulators. It can also support specialisation and economies of scale.
In the case of fintech innovation, there are five key elements that underpin a successful hub:
London and Singapore consistently rate highly as leading fintech hubs, and they both benefit from having all five of these elements in a single location. They see their progressive regulators, in particular, as providing significant competitive advantage in bringing new products and services into the marketplace. Furthermore, both hubs have mature and successful financial services sectors already, which provides strong foundations for fintech.
While there are many similarities between London and Singapore, though, they serve very different markets.
Fintech in the UK has had a significant focus on disrupting existing providers. The UK has a large, domestic financial services market which is dominated by a small number of providers. Fintech can increase competition and thereby make services cheaper, better and more focused on the needs of customers. This emphasis on competition and disruption has framed a lot of the debate about fintech in the UK.
Singapore has a different focus in its markets. As a small country, with a population under 6 million people, Singapore is more of a test-bed and gateway into the much bigger markets across Southeast Asia. These markets include many ‘unbanked’ citizens across the region, and fintech provides significant opportunities to increase financial inclusion. There has also been a more collaborative approach overall in Singapore. The banks have strong brands and fintech can help the sector digitalise and innovate, rather than disrupt it directly.
Consequently, while the key elements are common, the two fintech scenes have distinct flavours. The benefits and objectives are framed differently and the regulators tailor their specific interventions to meet these local needs.
