Financial technology (FinTech) is disrupting and democratising all areas of the financial industry – from payments to insurance, from mortgages to investing, and even money itself. This innovation has helped FinTech startups raise over $375bn in venture capital (VC) investment from 2019 to Q2 2023, according to Pitchbook.
As with many other areas of tech, the Covid-19 pandemic increased the adoption of many FinTech products. The need for remote financial services saw neobanks, such as Chime and Revolut, rise, whilst digital payment platforms, such as Block and Stripe, saw increased use as more businesses and individuals went cashless. At the same time, excess savings from reduced spending on recreation created interest in retail investing and accessible investment platforms, such as Robinhood and eToro.
High levels of VC funding and increased usage in recent years make this sector attractive. With successful FinTech cities across all continents, this is a truly global tech sector, but which cities come out on top?
Savills Tech Cities FinTech Index
Source: Savills Research. Tech sector verticals: B2B Payments, Cryptocurrency/Blockchain, FinTech, Impact Investing, InsurTech, MortgageTech
Can an old dog learn new tricks?
Just three cities, New York, London, and Singapore, account for almost 10% of the financial sector’s contribution to global GDP, according to Oxford Economics. These giants of the financial industry have an incumbent advantage in the FinTech space – providing expertise and a potential customer base. They rank first, second and fourth in our FinTech index.
New York, home to the world’s largest stock exchange, tops the index, doing particularly well for its tech environment and deep talent pool. Combining the intense demand for FinTech innovation and the vast capital base investors have in one place, it’s no surprise the Big Apple is our biggest FinTech player.
Across the Atlantic, London’s status as Europe’s financial hub also ensures that the city is Europe’s top FinTech hub. The UK capital has embraced innovation, it’s home to the largest number of FinTech companies in the world and saw the highest number of VC deals between 2019 and 2022.
A centre of multiculturalism, Singapore is establishing itself as Asia’s FinTech hub. The city-state plays host to the world’s largest FinTech festival and saw the highest level of VC investment in FinTech from 2019 to 2022 at $34bn. Singapore also provides global regulatory stability – the Monetary Authority of Singapore has eight agreements with regulators across the world.
Our top five is rounded off by San Francisco and Silicon Valley, neither of which are historically known as global financial hubs, highlighting how tech hubs have used FinTech to disrupt the financial industry. These cities are home to PayPal, Stripe, Credit Karma, and many other revolutionary FinTech startups. Technology has allowed cities across the world to level the playing field in the game of finance, which has led to a diversification of hubs away from historically traditional financial centres.
Unbanked banking on neobanks
According to the World Bank, there are currently 1.4 billion adults who are unbanked, or adults who don’t have their own bank account. Almost half of those who are unbanked live in China, Egypt, India, Indonesia and Nigeria. Cities in these countries take eight positions in our index: Shenzhen (23rd), Shanghai (26th), Hangzhou (32nd), Cairo (45th), Bengaluru (33rd), Mumbai (42nd), Jakarta (46th), and Lagos (44th).
These cities are leapfrogging traditional institutions and adopting FinTech solutions. According to the Global Findex Database, Kenya has seen a decrease in banking at traditional institutions but an overall increase in access to financial services – this difference being supported by an increasing use of FinTech. This adoption of FinTech pushes Nairobi, Kenya’s capital, to 43rd on our index.
Competition and consolidation shapes China
One of the early adopters of FinTech, China sees 87% of consumers using at least one FinTech service, according to EY. Despite this, Shenzhen, Shanghai, and Hangzhou all sit in the middle of the index. This is, in part, due to recent tightening of Chinese government policy regarding the reach of tech companies. In addition, China’s FinTech scene is unique in its competitiveness, being dominated by a few large companies, such as Ant Group and Tencent. This in turn is reflected in comparatively lower VC funding levels among startups.
FinTech goes regional
Whilst New York takes top position, there are a number of other US cities chasing success in FinTech; Boston, Chicago, Miami, Atlanta, and Charlotte take positions nine through thirteen on our index.
These cities are important US business hubs with a number of global companies headquartered there. Due to the size and scale that comes with being the world’s largest economy, North America has seen regional hubs emerge and grow into more localised financial centres. This provides startups across the continent with the opportunity to land big clients whilst managing smaller running costs than their counterparts in the Big Apple. These locations tend to have lower office rents than our top five cities – this provides a cost advantage allowing them to push cheaper products or spend more on developing products.
The FinTech desk
Not only do FinTech businesses disrupt the financial industry, but they also disrupt workplace trends. In a bid to attract top talent, FinTech businesses were early adopters of flexible working, promoting wellbeing in the office and prioritising digital equality. These occupiers also put particular emphasis on collaborative spaces in the office, pushing workplaces into the future.
Whilst FinTech – along with much of the tech industry – is currently seeing some cloudy weather, sunny days are ahead. Higher interest rates present the potential for increased profitability for neobanks. ESG is a top consideration for individuals and institutions, and the global unbanked population of over a billion people provides plenty of opportunity to FinTech players to support impact investing. FinTech provides global cities of all sizes the opportunity to become peers with the financial giants of the 20th century.
Methodology:
Our 2023 Tech Cities ranking measure a city’s business environment, tech environment, city buzz & wellness, talent pool, and its strength and depth across different tech sub sectors:
*for each of the 11 Tech Sub sectors (AgTech & FoodTech, CleanTech & ClimateTech, Deep Tech, E-Commerce, FinTech, Industrial Tech, Life Sciences & HealthTech, MediaTech, MobilityTech, Software, SpaceTech). These are aggregated to form our overarching Tech Cities index.
