7
May
2015
0

European Fintech Power Centers

Chris Larsen, CEO and co-founder of Ripple (@chrislarsensf) recently asked me how one could draw a parallel between US and European centers of fintech power alongside three characteristics: technology, capital and regulatory.

Most of us know the US fintech centers and their respective claims to fame:
Primary fintech centers
Silicon Valley: Technology and Capital
New York, NY: Capital, Capital Markets
Washington DC: Regulatory

Secondary fintech centers
Chicago, IL: Capital Markets
Atlanta, GA: Payments technology
Omaha, NE: Payments technology
Boston, MA: Asset/Wealth Management

Chris’ question got me thinking and several minutes later I shared the following thoughts with him via email.

“Europe is not as neatly distributed and integrated as the US. Several cities are vying for primary dominance, while others will remain satellites to a primary hub.

London: Capital, Regulatory, Insurance, Banking
Is both an onshore and offshore center. While its offshore might is diminishing, powers that be (legislator, regulator, executive) are planning a friendly framework to bolster the city as an onshore fintech center. London is already a center for capital compared to other European cities, and is now seizing the edge on the regulatory side from a “business” perspective. On the technology side I would qualify the city as neutral, neither being a laggard nor a force to reckon with. Plus it is one of the top three insurance centers in the World. Clearly the #1 fintech hub in Europe

Berlin: Technology
Hotbed of startup activity. Lots of employed techies, even more unemployed techies seeking their next gig. Rocket Internet, Hitfox/Finleap and many others I cannot remember contribute to make Berlin quite the spot. I am definitely starting to see more fintech activity out of Berlin.

Frankfurt: Regulatory, Banking
Obviously a regulatory center with BAFIN (the most professional regulator in the history of our galaxy, the least jovial too) and the Bundesbank. Most of the main German banks are located in Frankfurt. All participants in this ecosystem are known for their heightened and very latin sense of humor – my editorial comment. Less startup and technology activity arguably. Should startup activity pick up and Frankfurt attract techie talent, this city would be a force to reckon with.

Paris: Technology, Institutional Trading
Heck, I had to write about Paris, my birth place. Even if the country and its markets are so difficult to penetrate, I will still give it a nudge on the technology side. Paris houses some of the best engineering schools in Europe, and its engineers have been very successful in software, institutional trading, algo trading. So much so that you will find French software engineers, French traders across the world. Paris schools still churn out engineers by the bushel, top ones at that, very affordable, and these engineers are starting to apply their gallic brains to all things fintech. The AMF is quite the regulator but too parochial and entrenched to be an influential force outside of French borders.

– Other cities come to mind but are less influential due to their size.

The EU hydra: Regulatory
Interesting this. The US certainly does not have the equivalent of the EU, unless you believe the federal govt and Washington DC offer similarities. I lump the council in Brussels, the parliament in Strasbourg and the ECB in Frankfurt (even thought the ECB is not an EU emanation, I still count it as a supranational European avatar). Frankfurt might take the edge from a regulatory point of view compared to London, from “institutional” regulatory point of view – ECB + Bundesbank + BAFIN. The EU hydra can be quite influential indirectly in fintech (laws and directives on asset/wealth management, on the digital economy…) and directly with the ECB.”

I did not think of including Geneva/Zurich as a two headed hub in my reply to Chris. Both are definitely finserv centers (secretive ones at that) but maybe not fintech enough at this stage.

Did I miss any city worth mentioning? Am I being unfair in omitting Barcelona, Milan, Stockholm? Which city is the insurance hub of the US, NYC? Do share your thoughts.

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