Boston Fintech Week Preview: 24 Hours of Fintech – Perspectives on how to build a fintech ecosystem
26th Sep 2022 • Uncategorised
Author: Mark Casady, Founder, Vestigo Ventures
This article is part of Mass Fintech Hub’s preview series for Boston Fintech Week, which is taking place in-person from September 27-29. As Boston Fintech Week brings together the global fintech community of various stakeholders across the public, private and non-profit sectors, this article, which originates from a global virtual panel during 2021’s event, features insights from fintech leaders from around the world on the building blocks of fintech ecosystems in various regions.
Fintech has become an essential part of the innovation agenda for the financial services sector and entrepreneurial communities across the globe. Through collaboration and a willingness to build a fintech ecosystem, communities can bring stakeholders together to the benefit of emerging fintech startups, investors and the region. But what are the building blocks of a fintech ecosystem? I did a round-the-world tour visiting fintech leaders to hear about ingredients that have been key in bringing success to their regions.
12:00 p.m. ET – Boston, Mass. – A power lunch with Mike Fanning, Head of MassMutual US: Develop a mindset of collaboration and abundance
As I tucked into a lobster roll with Mike Fanning, I learnt that developing a “mindset of collaboration and abundance” is crucial. As Mike said, “We compete with a number of other large players in the ecosystem that are based here in Boston. What’s made a big difference is the emergence of collaboration and people willing to work together. Driving this is an abundance mentality, informed by the knowledge that it’s not a zero-sum game. Through working together – even though we compete every day – we’re making everybody’s business and communities better.”
He gives a lot of credit to Mike Kenneally, the Massachusetts Secretary of Housing and Economic Development, for pulling the right people together to make that happen. “An ecosystem takes a lot of care, feeding and passion – so it’s important to have great leadership in place,” he said.
Through the likes of incubators and multi-stakeholder hubs, he believes that dynamic collaboration can occur across multiple sectors.
“Here in Boston we’re seeing some very exciting connections being forged between digital health and fintech innovation, for example,” Mike told me. “It’s important to find ways to ensure that different verticals don’t remain siloed—accelerators such as Mass Challenge offer a great way to help achieve this.”
He encourages the sharing of ideas as part of embracing an abundance mentality. Reach out to other ecosystems, to entrepreneurs and to academic institutions. Part of what has made Massachusetts thrive as a fintech ecosystem has been the proximity of so many top notch academics who are providing cutting edge research and solutions that the rest of the ecosystem can leverage.
3:00 p.m. GMT – London, UK – Afternoon tea with Charlotte Croswell, former head of InnovateFinance: Get everyone round the same table
Over cucumber sandwiches and a cup of Earl Grey, Charlotte Crosswell told me: “To build a fintech ecosystem, you need a catalyst. What needs to happen first is a willingness for change driven by regulators and policy makers.” She explained that, following the 2008 financial crisis, UK regulators wanted to open up competition, and bring in greater transparency and openness to financial services. This, in turn, led to an entrepreneurial response by both established players and new upstarts.
She believes a big difference between the UK and somewhere like the US, for example, is that it’s very common for a regulator, a policy maker, an entrepreneur and a large financial institution to be able to gather in the same room. “There was a lot of sharing of concepts. Everybody’s at that same table, exploring what’s possible.”
7:00 p.m. CET – Paris, FR – Dinner with Lionel Grotto, CEO of Choose Paris Region: Government and regulators should embrace innovation
As we sliced into steak bearnaise at my favorite Parisian brasserie, Lionel Grotto emphasized the importance of policy and regulation in building a fintech ecosystem, adding that best regulators constantly benchmark what their global peers are doing, and are cognizant of best practices.
“At Paris Region, we’ve had pro-business financial regulators with innovation teams who adapted the legal and tax framework to make it fintech-friendly,” he told me. They were also able to recruit foreign companies without the language barrier being an issue. One British company choosing Paris to be its European hub was able to submit all its files to the regulator in English; today it employs around 70 people in its Parisian office.
Sponsoring an international fintech accelerator such as Le Swave or developing a flagship startups campus such as Station F are key to building a thriving ecosystem. Besides, having a world-class event such as Paris Fintech Forum has become strategic in building an ecosystem’s brand. Not to mention the energy and support by the regional politicians that developed the right trainings and pushed forward the financial industries.
He added that, although not dedicated to fintechs alone, the French Tech Visa for foreign entrepreneurs and their families has been an important step for building the fintech startup scene in France.
12:00 p.m. SGT – Singapore, Frank Troise, MD & CEO of SoHo Advisors: Embrace regional complexity
With $27.5 billion from nearly 1200 deals, last year’s fintech investment in the Asia Pacific region offered a sharp rebound from 2020’s $14.7 billion in deals, according to KPMG’s Pulse of Fintech H2’21 report. The report argues that following the clampdown on cryptocurrency by China, the likes of Singapore and India will become increasingly enticing to investors hungry for opportunity.
Singapore has the best of both worlds. While it’s long been a leading global financial services hub (with all the infrastructure, talent and regulation that entails), it is also aggressively innovation oriented and future focused. The city-state’s Fintech Festival is the world’s largest, while, at the regulatory level, the Singapore Monetary Authority’s Fintech and Innovation Group includes a dedicated AI division with the express purpose of growing the AI fintech system in Singapore. Singapore's proximity to many high growth economies makes this well-suited as a regional base from which to make the most of opportunities in nearby countries – many of whom have high levels of internet and mobile usage, which is crucial for widespread adoption of fintech solutions to occur.
“In Asia Pacific (APAC,) there is more demographic momentum and cutting-edge infrastructure than in many other parts of the world,” Frank told me. “The super apps leading the charge here have cracked the code with regards to maximizing both. I’d argue that APAC is several versions ahead of the USA, they are all very near one another, and who speak different languages. How do you crack this? Local SMEs partnering with domestic (ie US) management is a good place to start.”
Frank argues that the US is significantly lagging regulators in Singapore, Israel and Switzerland. “By removing this regulatory friction, entrepreneurs are moving to these jurisdictions to try new concepts, prove them out, and then bring them back to the US later (at MUCH higher valuations),” he said.
When you’re developing and promoting a fintech hub, there’s no cookie-cutter, one-size fits all approach. From region-specific tax incentives to innovation-friendly regulation to geographic location, each hub can – and should – be different. Identify what makes your hub a compelling offering – both to investors and to innovators. Then, hone these advantages and promote them effectively.
10:00 a.m. PT – San Francisco Bay Area, California – Rex Salisbury, Founder, Cambrian: Forge community, connect to capital
As the founder of Cambrian, Rex Salisbury knows a thing or two about nurturing a fintech community. Today, Cambrian has over 15,000 subscribers to its monthly updates, and another 5000 members on Meetup and Slack, representing over 400 fintech companies. As a forum for “founders, product managers, engineers, designers, and creators who are excited about using technology to build meaningful products in financial services”, Cambrian’s content includes growth stories as well as cogent analysis of cutting-edge trends. It not only offers regular events in San Francisco and New York City (you can check out recordings from recent fireside chats with Adam Nash Founder of Daffy and Ham Serungoji, Founder on Chipper Cash), but also has a co-founder matching service that helps founders find partners for their startup.
Over coffee and omelets, I learned from Rex that a community grows and prospers when it’s something that adds significant value to its members. That means offering timely and relevant insights, as well as ample opportunities to grow, learn, share and connect. Cambrian not only offers regular events in San Francisco and New York City, but also has a co-founder matching service that helps founders find partners for their startup.
“Your programming should foster community and knowledge sharing in ways that feel both meaningful and authentic–regardless of whether online or in-person,” Rex told me.
As a former partner in the fintech team at the Silicon Valley-based venture capital firm Andreessen Horowitz, Rex knows how funding is necessary at every stage of growth–without this, entrepreneurs will struggle to scale up and become viable, high-growth businesses. Creating a formalized fintech hub (whether non-profit, or a public-private partnership) which offers opportunities for investors and innovators to connect is a great way of helping to facilitate this kind of engagement. This, in turn, will promote both the long-term success of individual fintech startups as well as of the ecosystem in general.
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