Transformation in the financial industry has accelerated rapidly with the development of financial technology and the proliferation of smartphones. Fintech advocates see greater possibilities, however, and groups from over 20 cities worldwide are now coming together to form a federation. Their goal is to establish a network of Fintech hubs worldwide, which will work cooperatively to support start-ups and globalize innovation in the sector.
There is concern that innovation in Fintech lacks an organised support structure. Fintech start-ups compete with large incumbents to offer new products, such as mobile payment apps, which make transactions simpler, faster and cheaper, and expand financial access. Many innovative start-ups have struggled to win customers outside their domestic markets.
Innotribe, part of financial communications provider SWIFT, and Innovate Finance, the British trade body for Fintech are behind the federation’s creation. They believe global Fintech hubs will enable knowledge-sharing, give start-ups access to new markets, and provide the Fintech sector with a global voice, Reuters reports.
The new federation will be formally launched at this year’s Sibos financial services conference in Geneva at the end of September.
“It’s a group of equals”, said Fabian Vandenreydt, global head of Innotribe and the SWIFT Institute. “It’s a group of people that globally support innovation for the benefit of the banks and the start-ups.” Bodies representing more than 20 Fintech clusters worldwide, including Shanghai, Nairobi and Istanbul, have signed on to join the federation. The City of London has also signalled its support.
Competition for talent and market share in the fast-emerging sector is intense, with global financial and technology centres such as London, New York, Silicon Valley and Singapore vying for supremacy. The federation, say its creators, will be different in that it will be cooperative rather than competitive.
In the interest of advancing the industry as a whole, the federation will rank Fintech hubs according to criteria such as the ease of doing business, amount of capital and talent available, and the regulatory environment. This is meant to help members see where they can improve.
“If you’re looking for scale in LatAm, we want to connect you directly to the Sao Paulo hub”, said Innovate Finance CEO Lawrence Wintermeyer. “We're hoping to really be able to accelerate the connection of Fintechs (start-ups) and institutions to the source of knowledge.”