Deloitte published in April an interim report on behalf of the Global FinTech Hubs Federation (GFHF) that measures the fintech environment in 44 cities. Three U.S. cities are included in the report, including one new city since the initial report was released late last year.
GFHF is a network of industry associations that was created to encourage best practices in fintech and foster engagement between market participants. "Hubs" are cities where Federation members are located.
When GFHF released its first report in September 2016, it introduced 20 fintech hubs. April's interim report provides an update on those 20 cities, and introduces 24 more.
"In fintech, a lot changes over six months," the report acknowledged, as the industry matures, and as governments, regulators and fintech associations release more data about fintech's impact.
Hub representatives were asked to rate their local markets on the regulatory environment; government support; proximity to customers; availability of talent and expertise; presence of foreign startups in the local market (a higher score here indicating more opportunities for startups to expand beyond their own local markets); and an overall culture of innovation.
Using data from the World Bank Doing Business Index, the Global Innovation Index and the Global Financial Centres Index, Deloitte gave each city an Index Performance Score, with lower scores indicating cities that are more conducive to growth in the fintech space.
The report noted fintech firms in the United States are working in a "complex and fragmented regulatory environment."
(View of Brooklyn Bridge with Manhattan in background. Photo: ThinkStock)
Best North American Fintech Hubs
New York led U.S. fintech hubs with an index score of 14. The report noted some of the largest and most established financial firms are based in New York, and are actively investing in and collaborating with fintech firms.
"With Wall Street having both the largest capital base and greatest need for fintech innovation, the best technology and engineering talent have come together to create a vibrant and well-funded ecosystem within walking distance of the market they serve," Deloitte wrote.
Of course, "Silicon Valley is synonymous with technology innovation, which is now aimed at fintech," according to the report. With an index score of 18, Silicon Valley, while not a city, sits between New York and Chicago as U.S. fintech leaders.
"Silicon Valley consistently produces winners," Deloitte wrote in the report, noting the region's "majority share of venture capital investment, a majority share of the executive leadership of global technology companies and decades of demonstrated excellence in scaling companies from concept to global leadership."
Chicago, with a score of 20, is the newest U.S. city represented in the interim report. The Windy City is the "epicenter for all fintech activity in the Midwest," according to Deloitte, representing "well over 20,000 financial institutions." Its talent pool is bolstered by a concentration of the top U.S. business schools and financial industry workers, who account for 6% of the local workforce, according to the report.
