London and Singapore have been at the forefront an industry that has grown rapidly in recent years. Investment in fintech globally has rocketed 100% to £30.5bn in the three years to 2017, according to new research.
The five elements needed for a region to foster fintech success are; markets, talent, capital, progressive regulation, and strong government support, said a joint report from ICAEW and the Institute of Singapore Chartered Accountants (ISCA).
London and Singapore, the research found, have all these characteristics while also benefitting from “mature and successful financial services sectors”.
“No hub operates in isolation; they each need to draw on markets and global talent, as well as develop strong connections and links with other hubs,” said Kirstin Gillon, ICAEW technical manager, IT.
Gillon said that Singapore’s relatively small population means it must collaborate with surrounding countries, while in London fintech companies are trying to scale up and disrupt incumbents, with attracting the best talent a key objective.
“It is essential that businesses, regulators and governments adapt and tailor their fintech strategies and regulations to meet the particular needs of the country,” she added.
Where fintech innovation differs from other areas of technology is in regulation.
“As financial services is a regulated sector, regulation needs to be considered from the early stages in the development of fintech products and services,” the report stated.
“This provides significant opportunity to use regulation as a competitive advantage in fintech, and creates challenges for aspiring fintech hubs where there is less experience with financial regulation, or where regulators are slower to respond to opportunities.”
In April, research suggested that the UK fintech sector is expected to employ a total of 100,000 people by 2030, with 30,000 being created over the next decade.
However, the sector is highly dependent on immigration policy, as 42% of employees are from outside the UK and 28% from the European Economic Area.