KMPG’s Fintech 100: Location of the World’s Top 50 Fintechs
In a series of blog posts, we will analyze KPMG’s ranking of the top 50 Fintechs in the world, starting with their geographical spread. Many believe the Silicon Valley to be the center of Fintech development. That, however, may not stand true for much longer as more and more Fintechs are being created worldwide.
Today, we look at the diversity in locations of the most successful Fintechs according to KPMG´s Fintech 100 List. While the ranking is divided into the 50 leading and the 50 emerging Fintechs, we focus on the leading ones. Currently, the status quo shows that the Silicon Valley is the niche for Fintech development. In fact, exactly half of the 50 Fintechs from the ranking are located in the United States and 17 out of the 25 are based in San Francisco, Redwood City, or Palo Alto. The rest are spread through the Eastern parts of the country in Chicago, Atlanta, and New York. The US Fintechs are especially strong in the Lending, Wealth, and Currency & forex spheres and have a strong focus towards B2C business models.
The strength of so many United States Fintechs should not come as a surprise as the Silicon Valley was the location where the first building blocks of the Fintech industry were put together. JP Morgan CEO Jamie Dimon evaluated the Fintech industry in the Silicon Valley by stating that the, “Silicon Valley is coming. There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking.” Investors are attracted to Fintech as one of the hottest startup industries and so, the United States leads the world in Fintech investments.
The rest of the world, however, is trying to shatter the status quo and is catching up to the Fintech industry in the United States. Europe, Asia, South America, and the rest of North America are also included in the ranking with successful Fintechs. In fact, the number one position in the list of established players trying to change the finance industry comes from China. The map above shows the geographical spread throughout the world. Although more than half of the Fintechs are clustered in North America, Europe and Asia are also evolving quickly.
Europe is the fastest growing Fintech sphere with more than 215% growth in investments in the past year. According to London & Partners, the United Kingdom leads the way as Fintech startups there create $28 billion in annual revenues and have more than 44,000 employees, more than New York or the Silicon Valley, in London alone. In Asia and the Pacific, Fintech investments grew from $880 million in 2014 to $3.5 billion in just the first 9 months of 2015. The largest share of these investments went to payment- followed by lending businesses.
In Germany, Berlin serves as the main location for Fintech development. Overall, in 2015, according to Ernst&Young and Barkow Consultuing, the Fintech industry employed 13,000 people in 250-400 different companies all over Germany. Moreover, according to Deutsche Bank, German Fintechs have a great success in working with German banks as 56% of all banks cooperate with the newly developed industry for their digital strategy.
According to a study published by Accenture and the Partnership Fund for New York City, investment in the Fintech sector has increased from $150 million in 2008 to $3 billion in 2013 with estimates projecting the number to reach $6-$8 billion by 2018. With its coverage of a wide range of activities and offers of substitutes to financial products otherwise provided by banks, the Fintech industry is gaining a wider range of customers that value security, personalization, speed, and ease. Although the United States is still the leader in Fintech, Europe is quickly becoming one of the fastest growing and evolving markets. Asia and the Pacific follow in development as Fintechs in China, Japan, Thailand, Singapore and Australia are overtaking the E-Commerce world by targeting unbanked consumers and offline retailers. The Fintech industry is developing rapidly, and the status quo of the United States as a leader is under attack.