There’s no doubt fintech as a subject of both business model development and conversation is overheated right now. In a way, this is for good reason. As we all know, globally distributed technology, capability and social media means there’s never been a better time to launch a new idea, a challenger solution, or just a better way of doing things.
With this huge wave comes the fight to own the IP and industry around fintech. There are dozens of accelerators, incubators, funds and programs to help fintech ideas and startups get up off the ground and scale. Everyone’s searching for the next Asian unicorn.
Then comes the hyper competitive space of creating ‘fintech hubs’ in cities or nations across the world. The obvious centres of the financial universe are claiming to be the world’s fintech base. In Asia alone, at least 5 cities – Singapore, Hong Kong, Sydney, Shanghai, Tokyo and more – can claim for various reasons to be the region’s fintech hub. To be the landing and resting place for the world’s best fintech ideas to access Asia and the rest of the world.
Some of these cities have terrific infrastructure – government and industry support in Singapore, huge and close market access in Shanghai, active and involved banking industry in Sydney – others have an active startup scene – vibrant entrepreneurial activity in Jakarta; financial know-how and capital to invest in Hong Kong; creative ideas, technologies and brands in Tokyo; rich cultural heritage in Seoul – but not many have both in the right measure. And of course all these cities are putting these things right, and that’s good to see.
But in the end, it’s not a race. There need not be one winner. And there won’t be.
Let’s project forward on the broader fintech path and discuss two major factors.
Certain cities like Hong Kong with the foresight, resources and willpower will create regional fintech clusters. Over the time ‘secondary’ markets and cities will start their own alternative and local version of these fintech centres. Eventually, as technology becomes so ubiquitous, accessible and commoditised, some centralisation will dissipate. While access to capital and expertise may reside in fintech hubs the power to create transformative new solutions will sit on the mobile phone of an 18 year old coder in rural Java as much as it will sit on the tablet of a 30 year MBA grad in Tokyo. These solutions will become hyper localised, even personalised, and hyper adaptable to changing conditions.
2 Increasing pace of innovation
Twenty years ago, China was probably most likely known as more a manufacturing base for the world. Designs were sent, they made what was designed. Then the pace of manufacturing increased as technology was able to, and demand was asking it to. Then copying well known products became a China specialty – products would land in store, and cheap but quite adequate replicas would be on the street within days, even hours. Now China has become an innovation machine in its own right, and with some incredible impact. Shenzhen is now the centre of the technology revolution in hardware. The pace of invention and creation is furious. This will only increase, and become expected not just in a few centres, but everywhere.
There will not be a single market or segment in Asia that will be untouched by fintech.
This is the most remarkable thing about the fintech movement. It will sweep through the most advanced markets and economies, tuning the finance and adjacent industries through technology and digital transformation, and it uplift the least developed nations to a minimum standard that will see a dramatic impact on the way of life to its citizens.
Therefore, in the long end, no single city in the long term will really own the fintech story. The opportunity is too large for one nation state to own completely.
Collaboration and cross pollinisation between fintech hubs will create more wealth and prosperity than competition.
The moral of the story really isn’t to simply give up ambitions on creating a fintech centre, but to also over time work together and collaborate across cities and nations to create more powerful ideas together – it’s the way it will be in the end anyway, so let’s start now.
Come and discuss this idea and more at the 2016 Fintech Finals Conference & Pitch Competition in Hong Kong on January 25-16. Register today at www.FintechFinals.com