Daily Management Review

Federation formed by More than 20 Fintech Hubs to Push for Innovation


08/25/2016




Federation formed by More than 20 Fintech Hubs to Push for Innovation
In what would be the first attempt to coordinate and globalize web-based innovation transforming the financial industry, financial technology groups from more than 20 cities across the world plan to form a federation of 'fintech' hubs this year.
 
Due to its promise - or threat - to 'disrupt' traditional financial activity, Fintech is under the global spotlight. 'Blockchain' protocol is the

The 'blockchain' protocol, which could enable the clearing and settlement of securities such as stocks and bonds without the need for intermediaries such as banks, is one of fintech's fastest growing areas.
 
Products from this sector would offer financial access to people who don't or can't currently use the banking system and seek to offer customers cheaper, faster and easier-to-use services.
 
As the incumbents of the financial services sector rush to compete with innovative start-ups by offering new services such as mobile instant-payment apps, the sector has until now developed in a somewhat disjointed manner. Outside their domestic markets, many start-ups have struggled to access.
 
Blockchain will enable global hubs to share business knowledge, give start-ups access to new markets, and provide the sector with a global voice, believes Innotribe, the innovation arm of financial communications provider SWIFT, and Innovate Finance, the trade body for Britain's fintech sector, who have together set up the federation.
 
"It's a group of equals. It's a group of people that globally support innovation for the benefit of the banks and the start-ups," Fabian Vandenreydt, global head of Innotribe and the SWIFT Institute said.
 
As the global financial crisis shook consumers' belief in banks and sent them in search of alternatives and as smartphones have become widespread, development has accelerated in the last few years.
 
Competing for supremacy in the fast-emerging sector are the global financial and technology centers such as London, New York, Silicon Valley and Singapore.
 
The new federation will be cooperative rather than competitive say the Innotribe and Innovate Finance. The federation would be formally launched at next month's Sibos banking conference in Geneva.
 
To enable the centers to see where they need to make improvements, criteria, such as the ease of doing business, the amount of capital and talent available and the regulatory environment would form the basis for ranking the fintech hubs by the federation.
 
With the City of London itself also signaling support, bodies representing more than 20 fintech clusters from across the globe - including Shanghai, Nairobi and Istanbul have signed letters of intent to join the federation.  It should help start-ups and institutions gain visibility in new markets, said Innovate Finance.
 
"If you're looking for scale in LatAm, we want to connect you directly to the Sao Paulo hub. We're hoping to really be able to accelerate the connection of fintechs (start-ups) and institutions to the source of knowledge," said Innovate Finance CEO Lawrence Wintermeyer.
 
To allow each member hub to get a chance to lead the federation, the plan is for there to be an annual revolving chair. It will be funded by sponsorship from professional services firms.

"Fintechs play an increasingly critical role in the finance industry and therefore, their advancement is of the utmost importance," said Hubertus Vaeth, head of trade association Frankfurt Main Finance, which will be a member of the federation.
 
(Source:www.reuters.com) 






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