CEO, FINTECH Circle
New investments from China into UK FinTechs signal cross-border opportunities. FinTech bridges provide a regulatory co-operation environment to pave the way for further regional expansion.
The UK has maintained its position as the leading global FinTech hub and a gateway to Europe. This is especially relevant for overseas powerhouses, who now want to roll-out their current products and services, and who have scaled within their domestic markets and want to take advantage of UK initiatives such as open banking.
Cross-border FinTech innovation and regional expansion opportunities in payments, InsurTech and WealthTech have already been implemented by some of the main players in these sectors. However, as the geographical distances increase, understanding regulations and local markets become more challenging. In these cases, FinTech bridges have started to pave the way for organisations to expand overseas.
Engage with regulatory bodies
FinTech bridges between regions were initially developed and supported by governments and regional regulatory bodies building connections with other financial markets. Now the private sector is starting to engage with regulatory bodies by participating in co-operation agreements, such as referrals, reducing regulatory uncertainties and time-to-market, while benefiting from shared information on emerging trends. Moreover, businesses are encouraged to engage with regulatory bodies on the challenges they are facing. This could help regulators implement agreements through aggregating all the needs and challenges from their domestic private sector.
Bilateral FinTech agreements
As the FinTech sector has evolved, 46 bilateral FinTech cooperation agreements have been established between governments and financial regulators. These will be new ways to foster cross-border innovation and growth of bilateral trade and investments for the financial technology sector. These FinTech bridges aim to facilitate international investment into FinTech innovation and FinTech companies. They will support organisations seeking to expand internationally – overcoming market entry barriers through the support of governments, regulators, and the private sector.
China’s Belt & Road Initiative has made significant progress in overseas trade, with participating nations now counting for over 50% of global domestic product (GDP) in purchasing power parity terms and 80% of the world’s population. The Belt and Road initiative has already encompassed more than 1,100 projects, accumulating a total investment value of over US $750 billion, of which US $18 billion is in the tech and finance sector.
Global FinTech partnerships
The next phase of the FinTech evolution is focused on global partnerships, as FinTech solutions using cloud-based infrastructures can benefit from the economies of scale. Over the last 10 years, tech giants such as Apple, Amazon, Google, Facebook, Ant Financial, Tencent, Baidu have all launched FinTech solutions using a combination of strategies including investments, strategic acquisitions and global partnerships.
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