In the latest report by Deloitte on the ranking of fintech hubs, the usual suspects topped the lists: London, Singapore, New York and Hong Kong. This quartet of cities have dominated fintech when looking through the traditional lenses of venture capital funding and market reach. But where does the real success actually come from?
Deloitte already used other variables to create its new index, incorporating government support, innovation culture, proximity to expertise, proximity to customers, foreign startups and regulation into the mix, but doesn’t seem to get a very different outcome.
This actually might have something to do with the large diversity of fintech startups and their relative business cases around the globe, according to Jouko Ahvenainen in a recent article. He mentions that we see different types of technologies being applied in different parts of the world, such as mobile payments in Africa, where a lack of core banking services drives innovation to come up with new solutions around the problems this creates.
But the scale of these solutions is relatively small in comparison with the amassed financial power of startups in the traditional strongholds, which can build on funding, expertise and a large financial sector to work with. This soft spot might actually be holding back innovation, according to Jouko Ahvenainen, who states that, in the end, the most disruptive innovations are actually the ones that survive and stay with us over longer periods of time, unlike what many business consultants think is the ongoing trends of incumbents retaining their position.
The main takeaway may be that it is very important to accurately measure success by different variables, and delve deeper into the level of disruption. Using this method, it may become more visible to many professionals that the opportunities lie mostly with true innovation.
About Jouko Ahvenainen
Jouko is a serial-entrepreneur, e.g. co-founder of Grow VC Group, a pioneer in digital finance and fintech solutions, including digital investing and p2p lending. He participated in changing US finance regulation, getting the Senate and President to allow crowdfunding and has worked with EU and Asian finance regulation. Jouko started his work with crowdfunding models in 2008.
For the Deloitte report, click here.