Fintech from the Steppes or the Desert: The Emergence of New Regional Fintech Hubs

Fintech from the Steppes or the Desert: The Emergence of New Regional Fintech Hubs

This IDC Market Perspective looks at the success factors and building blocks of global fintech hubs and zooms in on the guided/targeted approach of new regional hubs rising in the East. What benefits do more formalized hubs that take advantage of regulatory sandboxes and huge governmental support offer to banks and tech suppliers? "The drivers for the organic development of fintech hubs in San Francisco, London, Berlin, and other such cities over the past decade were talented pools of technologists and investors; customer and regulatory expectations of a better, faster, 24 x 7 contextually aware service; and banks' need to cut costs and increase their nimbleness via co-operation deals with fintechs that weren't directly challenging them, or at least learn lessons from those that were. Having all the players in one place also helped to grow organic fintech communities," said Neil Ainger, research manager, IDC Worldwide Corporate Banking. "However, as the nascent industry has risen, so have rival cities with a more pre-planned approach such as Singapore. Now newcomers, without a history in the area or even a historical community of participants, want a piece of the action as well. Cities such as Abu Dhabi or Astana in Kazakhstan are using their oil wealth to set up R&D facilities and regulatory sandboxes with associated technology incubator and accelerator programs, mentorships, tax incentives, and so on in a bid to establish their own fintech hubs. They are already attracting participants, but it will be fascinating to see how sustainable such ventures are in the future and if they help to grow a domestic industry. The impact on the development paths of fintech companies, and indeed banks' co-operation strategies, in the future will also be worth monitoring. Can a unicorn ride out of the steppes, for instance, or more likely a phalanx of smaller fintechs become established? Time will tell, but the cultural aspects of setting up a mutually supportive community of developers, funders, and users shouldn't be negated."

Please Note: Extended description available upon request.

Executive Snapshot
New Market Developments and Dynamics
Fintech Trends
The Evolution of Fintech Hubs & Sandboxes
In the West
In the East
Building Blocks for a Fintech Hub
Case Study: AIFC
A Combination of East and West?
Advice for the Technology Provider
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