The TRADE and Global Custodian are producing a FinTech supplement available with the next issues of both magazines. The full version of FinTech hubs around the world will be featured in the supplement.
“Journalists can’t write about this, it’s just too complicated,” said Hamilton Ray, the curator and facilitator of the innovation-themed Innotribe sessions at this year’s Sibos expo in Geneva.
Challenge accepted Mr Ray. This year’s SWIFT-run event took place in Geneva and spent time looking at each region’s FinTech hubs and the challenges and opportunities they face.
These hubs are seen as essential in supporting FinTech development in their respective regions, with some emerging over the past year.
We attended each of the sessions and put together an overview of what’s going on in the FinTech worlds across Europe, Middle-East, Africa, Asia and the Americas - with special efforts made to change the mind of one Hamilton Ray.
In the EMEA region, the emphasis for FinTech companies centres on the importance of credibility and collaboration. How can FinTech start-ups - who were not so long ago riding into conferences on skateboards - co-operate with the stereotypical bureaucratic slow moving banks?
Well, as many experts are quick to point out, such partnerships are crucial for both players as the industry looks to move forward. So it’s about finding common ground.
For the banks it is about realising that they can no longer handle all digital activities in-house, for FinTech firms it is about gaining the credibility to attract the big players.
Nicolas Mackel, CEO of Luxembourg for Finance, suggests there are a number reasons why these polar opposites would attract, as their conflicting ideals may be mutually beneficial.
“Two years ago we were talking about start-ups with tattoos, a year ago it was the ‘uberisation’. This is not going to happen, and what we see in Luxembourg in FinTech is that start ups want to be regulated for two main reasons.
“The first is credibility, its about confidence, you want to sell your product or your service you want consumers to feel confident about it and this confidence is what the traditional industry provides.
“The second reason is granting access to the market so Luxembourg may be a small place but offers access to five million customers in Germany, France etc.,” said Mackel
Tough nut to crack
Wim De Waele, CEO of Brussels-based EggSplore also dispels the clichés that exist in Europe on traditional financial services and newer FinTech start-ups.
“The different techniques and methodologies are being developed, but on the side of start-ups, many are interested in partnerships with larger corporations, and getting to market is the toughest nut to crack.
“It is no longer the bad guys vs. good guys, and the fast guys vs. the slow guys."
Moving away from their respective cultures and collaborating appears to be on the agenda for European FinTechs, and these partnerships will clearly move
FinTechs away from just the good PR which they have been afforded thus far, as deals are signed and technology is implemented.
For FinTechs to develop within EMEA they need to produce on a business scale.
David Dab, chief innovation officer, ING Belgium, highlights the importance of FinTech firms having a key business criteria when approaching the larger traditional financial institutions in EMEA.
“For a FinTech start-up to succeed, they need a great idea which is of use, a fantastic team, there must be strategic ideas when bank, you need to find a senior sponsor/executive within the bank, who says ‘if this start up works’ it will create a solution for a problem,” he said.
Of course, FinTech will face challenges on the European front through the changing political context as well as the developments of external regulations will no doubt have an impact.
UK leads the way
However, European regulators are taking a key role in supporting FinTech with David Geale, director of policy at the Financial Conduct Authority suggesting that the creation of an innovation lab at the FCA has boosted FinTech development.
“We set up the lab in 2014, to help firms with ideas that will benefit consumers and we’ll help them to understand the regulation and look at our own rules,” explained Geale.
“We have supported around 300 firms with very different ideas and some of those are now active and in the market.
“We’ve also taken around 42 of those firms through the authorisation process and customer satisfaction has been around 76%, we give direct support to firms, we have a strategy to work with other regulators and we’ve issued guidance on the cloud,” says Geale.
The FCA has been one of the best regulatory supporters of FinTech developments throughout the world, even sparking an FT headline which read ‘UK regulators are the most FinTech friendly’.
Along with speaking at multiple events on the topic of FinTech, the UK regulator is also encouraging innovation through projects of its own and has also been expanding its team.
The FCA had also accepted 24 out of 69 applications from FinTech firms through its regulatory sandbox initiative at the time of writing.
To give some context to the the development of FinTech, Sibos 2015 in Singapore had one FinTech session; Sibos 2016 in Geneva had four. With the emphasis on EMEA seemingly on how FinTech could be applied purely for the benefits of our own industry.
Speaking at the BBA Fintech Banking Conference, director of strategy and competition Christopher Woolard, said that the 24 firms applying to join the FCA’s regulatory sandbox will now move on to testing and that opportunities of distributed ledger technology (DLT) could be applied to specific areas of the industry.
“DLT presents real opportunities in the regulatory space… Opportunities such as helping firms meet Know Your Customer or anti-money laundering requirements more efficiently,” Woolard said.
With regulatory support and a strong demand, the EMEA region is embracing the FinTech revolution sweeping the industry.
For more information on the FinTech supplement, please contact:
+44 (0)20 7397 3841