The fintech industry is growing immensely and rapidly, all thanks to the overwhelming influence of digital technology. Many countries are exploring ways to prove their leadership in this sector but guess who is leading the race? A joint report from The Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Singapore Chartered Accountants (ISCA) says that London and Singapore are excellent hubs for fintech activity. It further notes that these regions are interesting to explore because they have many of the same strengths, but also very different circumstances, providing a richer picture of fintech development around the world.
The Defining Elements of a Fintech Hub
Fintech is most effective when innovators, investors, and regulators can interact, build networks and learn from each other. As a result, the development of fintech solutions is generally concentrated in specific geographical locations, or ‘hubs’, where five key elements co-exist and work together – markets, talent, capital, progressive regulation, and strong government support.
Both London and Singapore benefit from having all of these elements in a single location, as well as mature and successful financial services sectors which provide strong foundations for fintech. However, no hub operates in isolation, and there is a need to draw on markets and global talent, and develop strong links with other hubs, says the report.
While the five core elements of innovation are common, there are also many differences between fintech markets. Therefore, businesses, regulators and governments need to adapt and tailor their fintech strategies to meet the particular needs of the country.
The report highlights how London and Singapore show the importance of tailoring detailed measures to reflect local differences.
Singapore, for example, puts a stronger emphasis on collaboration between start-ups and the established sector and acts as a gateway to new markets across Southeast Asia. By contrast, in London, there is more of a push for start-ups to disrupt the incumbents and more focus on the challenges of scaling up fintech businesses, it adds.
Overview of the Singapore Market
In addition, the report provides an overview of the fintech industry in Singapore.
Despite its small population, Singapore’s geographical position has given it strategic importance and enabled it to thrive as a global commerce, finance, and transport hub. It was rated in the March 2018 Global Financial Centres Index (GFCI) as having the fourth most competitive financial sector in the world, providing a full spectrum of services.
While Singapore is the largest hub in Southeast Asia, the industry is still in relatively early stages of development, the report finds. In less than two years, Singapore FinTech Association has grown into one of the largest FinTech associations in the world with more than 300 corporate members and international partnerships in more than 30 countries.