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Joburg, Cape Town join league of global fintech hubs

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 04 Dec 2019

Four African cities – Johannesburg, Nairobi, Lagos and Cape Town – are listed in the top 100 cities worldwide for fintech businesses.

The cities form part of a new league table of global fintech hubs, according to Findexable’s Global Fintech Index City Rankings 2020.

According to Findexable, the Global Fintech Index is the first global, real-time, objective ranking of all cities where there is a fintech cluster.

It explains the rankings are determined and updated using the company’s proprietary algorithm, which is digital and real-time. It uses open data and data sharing to create a continuously updated index.

The company points out that many of the cities which traditionally top the lists of leading financial centres are conspicuously absent this year.

However, South Africa (37) and Kenya (42) made it into the top 50 fintech countries in the world, with Nigeria (52) and Ghana (58) close behind.

Top of the worldwide list is the San Francisco Bay area, followed by London, New York and Singapore. The US also tops the list for fintech countries, followed by the UK and Singapore.

The Global Fintech Index City Rankings 2020 identifies emerging hubs, fintech companies and trends. The index algorithm ranks the fintech ecosystems of more than 230 cities across 65 countries, incorporating data from Findexable’s global partners including StartupBlink, Crunchbase and SEMrush, together with a consortium of regional partners such as the Africa Fintech Network.

Simon Hardie, CEO and founder of Findexable, says: “This [the index] is the inspiration of a thousand hours of interviews, surveys and Internet searches – and the product of four months of algorithm development to create, for the very first time, a fully global ranking of fintech countries and cities.

“The rankings in the report are proof of how much, and how fast, the world is changing.”

Hardie notes: “Fintech is the electricity of the global digital economy – making connections and finding the path of least resistance to make it easier and cheaper to transact.

“Keeping up with the pace of change and keeping track of progress, however, is essential if fintech’s innate digital difference is to be successfully converted into real-world value.”

A recent study by PwC says fintech investment in Africa is likely to be valued at $3 billion by 2020, with SA and Nigeria receiving a significant portion of these investments.

“SA’s financial services (FS) sector is undergoing a process of unprecedented change brought about by the disruptive impact of fintech challengers and the emerging technologies powering their business models. Fintechs are redrawing the competitive landscape and blurring the lines that define players in the FS landscape,” says PwC.

SA’s fintech strengths are digital banks, crypto-currency, insurtech and SME financing, the Global Fintech Index notes.

In SA, 2019 has been dubbed the year of the digital banks, with new players like TymeBank, Discovery Bank and Bank Zero coming in to the fray to disrupt the traditional financial services market.

On the insurtech front, start-ups like Pineapple and Naked, among others, hogged the limelight.

Several crypto-currency marketplaces have also mushroomed in SA, including Naspers-owned Luno, AltCoinTrader, and iCE3X.

According to the report, the leading fintech accelerators in SA are Fintech Open Innovation Cluster, Cape Innovation and Technology Initiative, AlphaCode and Rand Merchant Investment Holdings.

It points that SA has fintech-friendly rules, noting the South African Reserve Bank established the Financial Technology Programme to assess the emergence of fintech and consider its regulatory implications.

SA’s Financial Intelligence Centre, Financial Sector Conduct Authority, National Treasury, South African Revenue Service and the South African Reserve Bank have released a consultation paper on crypto assets.

The paper envisions a regulated way forward for crypto asset service providers in SA.

In June, the Financial Action Task Force, a global standards-setting body of which SA is a member, issued “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers” which similarly provides a regulatory framework for the new industry.