Top 5 Emerging Fintech Hubs Across The World In 2023

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Fintech is a highly lucrative sector, with Juniper Research predicting that it will generate a staggering $638bn in revenue by 2024. This represents an impressive 143 per cent growth compared to estimated revenues for 2019.

Amidst the uncertainty of Brexit, London’s status as a financial capital is in question. As a result, other cities are stepping up as fintech hubs, attracting foreign investment and fostering start-up growth to capitalize on this expanding market. According to a survey by Startup Genome, these are among the top emerging fintech hubs to watch right now:

1 – São Paulo
Brazil is the leading country in Latin America when it comes to fintech start-ups, with São Paulo being the main hub for these companies.

“Home to the European Central Bank and more than 200 banks – most of which are foreign – Frankfurt plays an important role in the EU’s financial system”

Due to a prolonged financial crisis and the dominance of the five largest banks, Brazilians have developed a lack of trust in traditional banks. This distrust stems from the perception of high-interest rates and excessive bureaucracy associated with these institutions. As a result, approximately 40 percent of Brazilians are excluded from traditional banking services. This has made the city a thriving space for disruptive fintech start-ups.

One such start-up is Nubank, a Brazilian online bank and credit card operator, which is currently one of the most highly valued privately held start-ups in Latin America. Over the next 10 years, Brazil’s fintech market is projected to generate potential revenue of up to $24bn.

2 – Lithuania
One country poised to see an explosion of opportunities after Brexit is Lithuania. In February of this year, the country saw around 100 British financial companies apply for a licence in the country. This is in part because Lithuania has been creating a favourable regulatory environment to help start-ups flourish. For instance, the Bank of Lithuania’s regulatory sandbox allows firms to test new technology before releasing their products to the market.

The country also has the shortest waiting time for e-money or payment licences in the EU. As such, the World Bank placed Lithuania 14th out of 190 countries in its Ease of Doing Business index in 2019. With the number of fintech firms in Lithuania having doubled between 2016 and 2018, the country appears to be well on its way to becoming a leading fintech hub.

3 – Estonia
Estonia boasts one of Europe’s highest rates of start-ups per capita. Startup Genome reports that 29 per cent of all jobs created by these start-ups are in the country’s fintech industry. One of the most prolific unicorns to emerge from the Baltic country is international money transfer company TransferWise, which raised $280m in investment in 2017.

This surge in start-ups has in part been driven by Estonia’s e-residency programme, launched four years ago, which allows people to register a business in Estonia from anywhere and run it remotely. The government also created the Startup Estonia initiative, which provides training programmes for start-ups and education for investors.

Furthermore, Estonia is considered to be one of the world’s most advanced digital societies. According to CNBC, 99 per cent of its public services are available online and it has stronger broadband than many countries across the developed world.

4 – Frankfurt
Frankfurt, home to the European Central Bank and over 200 foreign banks, holds a significant position in the EU’s financial system. This advantageous position allows the city to attract innovative start-ups. The business community in Germany actively promotes such ventures through various programs, including accelerators and corporate involvement initiatives. In 2016, Deutsche Bank introduced Digitalfabrik, a platform that aids in the creation of digital banking products. Additionally, platforms like TechQuartier have been established to facilitate connections between start-ups, banks, investors, and mentors.

Financial institutions and newcomers in the city are motivated to foster innovation, drawing inspiration from the success stories of start-ups. One such notable example is 360T, a renowned foreign exchange trading platform. In 2015, Deutsche Böerse bought 360T for $796m in Germany’s largest start-up acquisition at the time. Although Berlin is still largely considered the tech centre of Germany, it appears Frankfurt is quietly fostering a start-up ecosystem that could one day rival the capital’s.

5 – Bengaluru
Bengaluru, formerly known as Bangalore, is poised to emerge as one of the upcoming major technology hubs. With its thriving IT industry, world-class infrastructure, and highly skilled workforce, Bengaluru has attracted the attention of global tech giants and startups alike. The city’s favourable business environment, coupled with a supportive government, has fostered a culture of innovation and entrepreneurship.

As a result, Bengaluru has witnessed a significant influx of investments and talent, propelling it towards becoming a powerhouse in the tech industry.

One of Asia’s fastest growing start-up ecosystems, the city is home to 438 fintech start-ups and has been dubbed the ‘Silicon Valley of India’. One such start-up is Bengaluru-based Zerodha, an online broker that has transformed stock trading in India.

While fintech is in its early stages in India, the opportunities are rapidly growing. The country recently overtook China as Asia’s top fundraising hub for fintech.

These opportunities are especially exciting in areas such as payments, which constitute the largest share of fintech start-ups in India. As a testament to the country’s potential, Mastercard is planning to invest $1bn in India over the next five years and has opened offices in Gurgaon and Bengaluru.

With its vibrant startup ecosystem, research institutes, and prestigious educational institutions, Bengaluru is well-positioned to continue its growth and solidify its status as a leading tech hub in the years to come.

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