We are seeing the gradual rise of a robust financial technology (fintech) sector around the world, with financial hubs such as London, New York and Singapore fast-developing thriving fintech industries. London and Singapore were recently named the world’s top fintech hubs. Htet Tayza comments.
Last year, Singapore was crowned Asia’s largest financial centre, in a study carried out by the think tank Z/Yen Group. Out of a possible score of 1,000 points, the city-state earned 755 points, as it has deep liquid and capital markets, a triple A-rated economy and a robust fintech sector. It was only beaten in the rankings by global financial capitals New York (792 points) and London (800 points).
Singapore’s fintech sector is fast-becoming the envy of the world. It has adopted a ‘sandbox’ policy, allowing firms to foster fintech innovation free of regulatory burdens, while the city-state’s central bank has invested heavily in fintech development, and these factors are increasingly drawing start-ups to Singapore. It is clearly now competing with London to become the world’s top city for fintech.
This was recently confirmed, industry portal Finextra writes, by the release of financial services firm Deloitte’s latest report. This study is the second put out by the company, which ranks fintech hubs on a performance index, to determine the largest fintech markets on earth. This second report covered 44 global fintech hubs, scoring each on the ease of doing business in their markets for fintech firms.
Deloitte’s first report saw London and Singapore ranked as the most prominent fintech hubs on earth. Coming in at first and second-place respectively, London and Singapore retained these positions in this report, followed by New York, Silicon Valley and making its debut on the list, Chicago in fifth place. Only a handful of these hubs, such as London and Singapore, have adopted sandbox fintech policies.
Deloitte scored these regions’ fintech markets based on a number of factors, including regulation, government support, infrastructure etc. Naturally, thanks to the Central Bank the Monetary Authority (MAS) of Singapore’s actions, as well as the support its government has given to fintech, the city-state scored well in all these categories, while the wider Asia-Pacific region scored highly for regulation.
The report also delivered a few other interesting insights. It showed that in Africa, fintech firms are centred on the mobile and social payments segments, probably due to the high unbanked rates in the region, but due to a lack of infrastructure, as well as favourable regulation or government support, fintech successes are rare on this continent. Meanwhile, in Europe and North America, fintech hubs scored particularly favourably in terms of infrastructure, as they possess established financial markets.
It is clear that the MAS and the government of Singapore are gradually turning their city into a prominent fintech innovation hub, because they have struck a good balance. They are supporting the emergence of the sector, while taking a hand-free approach, allowing entrepreneurs free reign to develop amazing fintech solutions, which will revolutionise finance and lift Singapore’s economy up.
However, it may be some time before Singapore displaces London to become the world’s most important fintech hub, as the British capital has long been our premier financial market. London has a highly developed financial sector, performing phenomenally well in areas such as infrastructure, regulation, human capital, business environment and more, so the city had the necessary elements in place to develop its fintech sector more rapidly than ever else. But despite the fact that it is very much an emerging financial centre, Singapore is clearly quickly catching up to London in the fintech stakes.