banking systems, both retail and wholesale. Moreover, the professionalism of start-ups is increasing thanks to improved coaching and mentoring programmes. Start-ups are becoming much more savvy in terms of how procurement processes work in banks and they better understand how to come up with the facts and figures required to successfully present an idea.
These hungry young companies are changing the competitive landscape. They are adopting new technologies and business models to meet the needs of financial institutions in everything from lending to securities, and payments. In parallel, the industry as a whole is becoming ever-more curious to understand and potentially capitalise on new ideas. This is evident in the number of entities, such as incubators and accelerators, who exist to help nurture start-up talent and bridge the gap between the financial community and the start-up ecosystem.
We have also seen a major change in the relationship between start-ups and banks. It used to be an “us against them” dynamic but this has evolved significantly. The banks now see Fintech as an integral part of their innovation strategy, and there is a need to recognise it as such. There is an emerging sense of collaboration between banks and new Fintech companies.
Geographical trends are also interesting. Fintech innovation tends to emerge in specific cities, or financial centres, rather than at the level of countries as a whole. Nevertheless the overall number of hubs is rising and we predict that the expansion of Fintech will continue.
Long established financial centres are broadening their horizons and increasingly embracing Fintech. Frankfurt, Luxembourg, Dublin and London are just a few examples of a growing network of Fintech havens popping up all over Europe. Part of their recipe for success is being very open to all professions and nationalities. A combination of financial backing, real estate backing and universities is equally important. This valuable mix makes such environments attractive destinations for start-ups.
In addition to the larger financial centres, the Nordic region has – from a technology and enterprise standpoint – typically been at the forefront of things, and is now increasing its presence in Fintech as well. Spanish banks have also been active in prioritising subsets and pockets of Fintech innovation.
Beyond Europe, from Asia Pacific to Latin America, we are witnessing the development of new start-up hubs in markets which are fertile for innovation and disruption. For SWIFT and Innotribe, Africa is a region of emerging importance across the business but also in terms of innovation. It was for this reason that we brought the Start-up Challenge to Cape Town this year for the first time, which was a great way of drawing attention to innovation happening on the ground in African communities and outside of the ‘traditional’ Start-up Challenge geographies of London, New York and Singapore.
Ultimately, if you are in a financial centre, you will attract investors as, more often than not, it’s a safe place to invest. But it helps if there is also a unique selling point – such as talent. Most aspiring Fintech communities realise that they need to import talent to some extent, but some ecosystems are more advanced than others. You want to start small but the sooner you open up, the better.
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Singapore is a prominent example. The start-up scene has opened up to importing talent with very specific skills, such as cyber skills or venture funds skills, in order to boost their ecosystem and to scale it faster.
We have also noticed a growing demand from governments or banking associations to create a positive environment for Fintech innovation. In the US, for example, there has been conscious development of a culture of controlled risk-taking and an environment has been created that allows people to fail gracefully. This mind-set shift ensures that start- ups are not considered “unsuccessful” if they fail first time round, and it becomes much easier to pick up and start again.
It may sound simplistic to highlight the importance of such a positive, “can do” environment, but it remains integral to the success of innovation in Silicon Valley and it’s an ethos that is also reflected in New York. Moreover, if an entrepreneur asks a potential investor for $100k in the US, the response is likely to be ‘what can you do with $1 million?’ Whereas in Europe, if a start-up asks for $100k, the investors might ask, ‘what can you do with $50k?’ It’s a very different approach to risk and ambition.
Another important theme is fostering a diversity of talent. This year, we have tracked the gender of the founders of firms applying to participate in our Start-up Challenge. At 23% female and 77% male, the figure is unbalanced and we hope to stimulate improvement. Considering that there was only one female CEO among the current list of top 50 European Fintech companies (by venture funding) our numbers are not bad - but clearly it's not 50/50. This is an issue that has been raised a lot in debate among industry players recently, and we hope to further address it from an educational perspective.
Looking to the future, we now have an alumni network of more than 650 start-ups. We are very proud of this, and we hope to empower this vibrant ecosystem to work together on specific areas of innovation that truly add value for the wider financial community. And as a company, SWIFT plans to work closely with start-ups and growth stage companies to develop proofs of concept which will empower our strategy going forward.
We feel that it is essential for companies to identify opportunities to collaborate, share experiences and learnings, and debate common challenges. If we want to move forward as an industry, collaboration across the various Fintech communities is more important than ever. As a global, cooperative, SWIFT is eager to support innovation and to find ways of bringing scalable, real-world change to address the many change drivers prevalent in the financial community. As technological innovation continues to evolve, Innotribe will play a vital role in continuing to bring the start-up ecosystem and financial services expertise together.4
4 This article is part of The FINTECH Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries. Edited by Susanne Chishti and Janos Barberis, it is the first crowd-sourced
Financial Technology handbook for investors, entrepreneurs and visionaries, representing thought leaders across 27 countries. The book was published by Wiley in April 2016. For more information, visit the publisher’s website
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About Innotribe
“Launched in 2009, Innotribe has provided powerful insights on innovation. Through global events and research initiatives, Innotribe brings together innovators, investors, and influential decision-makers from leading financial institutions worldwide to identify, develop, and implement transformational innovations. Our programme at Sibos allows us to directly engage with our community on current innovation activity, emerging trends, and potential disruptors of today’s financial ecosystem. Since 2011, the Start-up Challenge has also connected the financial services industry with more than 650 Fintech start-ups, featuring fast-paced company pitches and social networking events. For more information, please visit www.innotribe.com or follow us on Twitter: @innotribe and LinkedIn: