Regulatory pressures, millennial customers demanding different services and the impact of digital giants such as Google and Amazon are making innovation an imperative for banks and financial services organisations. But banks are not very innovative on their own, being risk averse and focused on their balance sheets.
HOW THE MAIN FINANCIAL TECHNOLOGY HUBS COMPARE
Silicon Valley
- World’s largest innovation hub in all things digital not just financial technology • Access to some of the world’s best and brightest tech experts
Trump card: Density of innovation
New York City
- Financial services capital of the world • Robust tech sector, second only to Silicon Valley
Trump card: Proximity to banks
UK
- Attracts large amount of capital investment • Huge existing financial technology expertise
Trump card: Proximity to banks for funding and to buy out start-ups
Brussels
- Proximity to European parliament and European regulators • Central location for tapping into pan-European markets
Trump card: Small but central
Luxembourg
- 140 international banks present • Major European Union payments hub
Trump card: International banking
Switzerland
- International banking • Secrecy and security
Trump card: Security
Australia
- Very creative • Expert in digital and mobile technology
Trump card: Creativity in digital and mobile
Singapore
- Proximity to many emerging markets, both B2C and B2B • World leading universities at cutting edge of research
Trump card: Access to the world’s emerging markets
The answer lies in exploiting regional financial technology innovation hubs, was the message coming out of Innotribe yesterday at Sibos, with a range of independent hub operators outlining what they can do in each region.
Financial technology hubs are geographically concentrated areas of expertise that have good economic and governmental support, regulatory support, proximity to banks and proximity to bank customers. Think Silicon Valley, which is one of the most famous concentration of innovators in the world for now.
“Fintech hubs create a ‘sandbox’ for experimentation and innovation and a place for banks to try things out and develop new solutions to create new products,” explained Mike Sigal, partner, Cashflower, a financial technology hub based in Silicon Valley.
“Banks need these hubs because they are not natural innovators,” said Lawrence Wintermeyer, chief executive, Innovate Finance, a UK government-backed organisation focused on developing links between financial technology startups, regulators and banks. “And the innovator and startups need the banks for funding and scale-up, so it is a comfortable relationship.”
Sigal also told delegates that looking to make use of innovation hubs wasn’t about finding one and using it for all innovation, but more about looking at what each offered for different aspects of a business and using each to innovate around what was good for each of these areas.
