In its Global Startup Ecosystem Report 2022 Fintech Edition, Startup Genome has listed the top fintech ecosystems in the world. The top 5 ecosystems include Silicon Valley, New York City, London, Singapore, and Hong Kong.
Among the top five, Hong Kong is reported to be a new entry due partially to its number of fintech-focused accelerators and incubators, which are reflected in its focus factor score.
The city also scores well in funding, which includes early-stage funding volume and growth, as well as the number of local investors, the report stated.
The positioning of Hong Kong as a key innovation and technology hub for the Greater Bay Area and international financial centre – as laid out in China’s 14th Five Year Plan – will enable fintech firms in the city to leverage Hong Kong as a test bed for further expansion to mainland China’s massive markets.
It will also enable them to raise capital and create demand, according to Edmond Choo Chiang Yong, in Attracting funding to Hong Kong fintech sector.
Highlights of the report:
- North America and Asia both have eight ecosystems in the top 25, making up 32% each.
- Europe holds 24% with six ecosystems.
- MENA, Latin America, and Oceania each have one ecosystem in the top 25 (4% each).
- No African ecosystems are represented.
The top 5 fintech ecosystems across the globe
1. Silicon Valley
Silicon Valley, located in the South San Francisco Bay Area of California and named after the main material in computer microprocessors, is now the destination of choice for technology businesses.
According to Investopedia, many of the reasons for this region’s success have to do with the social and cultural aspects of the tech community that has grown there.
As authors of The Culture of Innovation: What Makes San Francisco Bay Area Companies Different?, a 2012 joint study by the Bay Area Council Economic Institute and Booz & Co. said, *What we found was a special trait that distinguishes Silicon Valley’s firms from ordinary companies: the ability to integrate their innovation strategies with their business strategies.”
It is ranked 10/10 in performance, funding, startup experience, talent, and legacy by the report.
2. New York City
New York City ranks second in global fintech ecosystems – ahead of London, with which it previously shared a spot.
“New York was an obvious choice for a lot of the companies who knew they’d be able to attract a lot of financial talent,” said Wong in 2016.
“On the other side of that, you’re seeing a lot of tech and engineering talent wanting to move to New York. Knowing that the financial system is so deeply embedded in New York, and knowing that the tech ecosystem in New York overall is on the rise, I think is the primary reason you’re seeing a lot of fintech companies wanting to set up here instead of in the Bay Area.”
New York City has a strong presence of incubators and innovation labs that have been set up to support Fintechs right from seed funding to exit.
According to The Global City, with nearly 90,000 finance and insurance firms in the UK, London has one of the world’s highest concentrations of financial and professional firms. More reason it is a thriving fintech ecosystem of around 2,500 companies in Britain, mostly in London, making London the third biggest fintech hub in the world.
It is positioned within the world’s largest financial hub and contains some of the most innovative and recognisable Fintech startups, such as Transferwise, Monzo, and Funding Circle.
Moreover, London’s Fintech scene has been supported by a broader national movement, where from 2010 to 2016, Britain attracted US$5.4 billion in Fintech-related investment out of a global amount of US$49.7 billion. Since 2011, there has been a steady increase in the number and value of announced fundraisings secured each year, as London’s fintech scene has continued to grow in both size and maturity.
London also has an abundance of venture capital firms and fintech-focused accelerator programmes, providing equity finance and support to businesses in the city.
In 2020, Singapore demonstrated resilience amidst the COVID-19 pandemic. While the COVID-19 pandemic resulted in a fall in overall Fintech funding in Asia (particularly in China and India), the funding landscape in Singapore has been less volatile.
Despite an initial decline in funding, Singapore’s Fintech investments rebounded in the second quarter of 2020, with investors recognising the opportunities existing in Southeast Asia.
Singapore is like Switzerland of Asia – you have a lot of money here, and people are well experienced in the money management/banking industry. So for startups to come here and start innovating, coming up with new ideas – it’s a perfect place.Keir Veskiväli, Founder of Smartly.
For fintech companies, Singapore is good because it is a renowned international financial centre and a consistently growing fintech hub that boasts progressive regulation, innovation support schemes, and a government committed to turning the nation into a tech powerhouse.
Not only that, but the city-state is also home to a vibrant startup community and a large pool of investors looking to back the next tech success stories.
5. Hong Kong
Hong Kong has one of the highest consumer Fintech adoption rates (67%) in the world, ranking above markets including France, USA and Japan. It also has a high B2B adoption rate of Fintech, with 66% of Fintech companies focusing on the B2B market.
The city also serves as a platform for mainland China, the world’s top consumer market for Fintech, with 51% of companies operating or planning to expand in the Greater Bay Area. According to HSBC, 37% of their international survey respondents see Hong Kong as the preferred entry point into the GBA.
Besides progressive regulatory policies, Hong Kong’s government offers multiple grants to help startups establish, grow and expand. From R&D support, favourable tax deductions, waived fees and financial hiring assistance to offering matching funds for development, fundraising and even overseas expansion, Hong Kong offers unmatched opportunities for fintech innovation.
What is the place of Africa’s fintech ecosystem?
Between 2020 and 2021, the number of tech startups in Africa tripled to around 5,200 companies. Just under half of these are fintech companies, which are making it their business to disrupt and augment traditional financial services – Mckinsey and Company.
The African fintech ecosystem is, indeed, growing exponentially, with innovators attempting through different means to solve their own local problems.
The fintech ecosystem is reported to have attracted 62% of the total $5.2 billion in funding raised by startups in Africa in 2021. In H1 2022, the sector attracted 68% of African startup funding, and fintech startups led the emerging venture markets with 210 concluded deals in the first half of 2022.
Africa’s fintech ecosystem may be growing, with Kenya, South Africa, Nigeria and Seychelles leading, but, as with other fintech ecosystems, there is a need for proper regulatory policies and government support to keep the growth at a progressive rate.
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