20

April


Peter Fletcher-Dobson

FinTech in the world

While we’re excited to be running New Zealand’s first FinTech accelerator, the FinTech movement is a global one and it’s fascinating to see how other countries around the world are handling the revolution. I thought it’d be good to take a look at some of the leading countries in FinTech to give you a taste of what’s to come here in our own backyard.

China

Surely you’re not surprised to see China in list of rising FinTech stars. The centre of FinTech has been migrating eastwards since 2008 and China is the world’s new global technology hub, more so than Silicon Valley and London in fact.

Shanghai, Beijing, Shenzhen and Hangzhou have seen the emergence of multiple fintech hubs determined to revolutionise financial services across the country. In 2016, China accounted for more than 50% of global FinTech investments.

This might explain why China is so good in the “unicorn” space - those sweet start-ups valued over $1 billion. Out of 27 of the world’s unicorns, China is home to eight, which might not be that impressive compared to America’s 14. That is until you look at the details…For instance, America’s unicorns are only valued at $31 billion whereas China’s are valued at $100 billion. And it’s worth mentioning that the top four biggest FinTech unicorns are, well, Chinese:

  1. Ant Financial (valued at $60 billion)
  2. Lufax ($18.5 billion)
  3. JD Finance ($7.0 billion)
  4. Qufenqi ($5.9 billion)

This is clearly a country that’s got an appetite for disruption. Perhaps surprisingly, China’s inclusive, tolerant regulatory environment has helped create a thriving culture of innovation and entrepreneurship among its tech crowd. This encouragement extends to the larger existing corporations innovative more themselves and helps all tech companies, big and small. further explore exciting digital finance possibilities.

Japan

Japan may have had a slow start in the FinTech space, but over the last 12 months they’re trying to make up for it by increasing their investments to $154 million (not bad considering 2016 saw only $65 million in investments). Recently, the Bank of Japan launched a blockchain test drive as it’s trying to develop more insight into the workings of the technology. Another three of Japan’s megabanks all invested in Japan’s biggest Bitcoin exchange, bitFlyer in February too. Due to its strong bank-centric culture combined with a stagnant economy, Japan is making the necessary efforts to improve its financial position in the world. We could cut them a little slack considering the collapse of the Mt. Gox bitcoin exchange in 2014.

If you don’t know about it, Mt. Gox was a bitcoin exchange based in Tokyo that was launched in July 2010. And by gosh it was successful. By 2013 Mt. Gox was handling 70% of all bitcoin transactions globally. However, in February 2014, the Mt. Gox company suddenly suspended trading, closing its website and exchange service. In April 2014, liquidation proceedings began and during this process they announced that over 850,000 bitcoins belonging to customers and the company were missing, an amount valued roughly $450 million at the time. Hence, Japan became one of the first countries to regulate digital currency exchanges which explains their slow embrace of FinTech since then.

India

The FinTech landscape in India has been undergoing an impressive transformation over the past two years. From the growth of e-commerce and fast adoption of mobile technology to the many efforts made by government and regulatory bodies to facilitate growth, the result is that the masses are adopting the idea of digital payments rapidly. Demonetisation has accelerated the utility value of digital payments companies and is helping to cut down on rampant corruption. With $1.25 billion invested in Indian FinTech startups in 2015 alone,  the sector is projected to grow at 22% per year to over $2.4 billion by 2020.

There are over 72 FinTech startups working across lending, payments, insurance and banking in India currently. Needless to say, but I’ll say it anyway, watch this space!

In other news

Ok, it looks I’ve been a bit biased with Asia and its hold on FinTech, but of course there are other countries killing it in this space. I won’t bother mentioning America and the UK, because come on, you can just open any financial website and get the lowdown on what they’re up to as they’re always featured. Deloitte and the Global Fintech Hubs Federation have recently released a FinTech hub review, which held some good news for our neighbours across the ditch.

Both Sydney and Melbourne are continuing to climb the ranks of the world’s leading financial centres, while favourites London and Singapore shared the top spot, followed closely by New York and Silicon Valley at 3rd and 4th places, and Chicago as the new kid on the block at 5th.

Also, the Baltic States, which happen to be among the smallest countries of Europe, are producing many Fintech startups. And they’ve got a unicorn in Estonia’s international payments startup, Transferwise.

For me personally, I’m not really fussed where the exciting FinTech growth is happening, I’m just thrilled that it’s happening around the world, period. And if countries like China and Japan, Estonia, Israel and Australia are anything to go by, we’ll be seeing a lot more brilliant FinTech ideas coming out of New Zealand too. Don’t just watch this space, get amongst it.

Peter Fletcher-Dobson is the Digital Strategy Lead at Kiwibank, proud sponsors of the Kiwibank FinTech Accelerator. To find out more, get in touch.