One of the mostrecognizable lines in movie history, “…we’re not in Kansas anymore,” from the 1939 film The Wizard of Oz, today applies to Silicon Valley. Once the dreamdestination for innovators and entrepreneurs around the world, the region islosing its grip on the hottest new companies in financial technology (FinTech)as the payments industry looks to develop global innovation hubs around theworld.
The globalization of FinTech innovation can beseen in recent announcements. For example, Citi Ventures (the investment arm ofCiti Bank) announced that it will be partnering with Californian acceleratorPlug and Play to launch a global FinTech innovation program, with locations inthe U.S., Germany, Singapore, Brazil, and Spain. Debby Hopkins, chiefinnovation officer of Citi and CEO of Silicon Valley-based Citi Venturescommented on the announcement, saying:
“Ourteam is committed to accelerating emerging technologies that have the potentialto transform financial services experiences for Citi’s customer. Collaboratingwith Plug and Play adds to our internal innovation efforts and increases ourability to work with startups on disruptive new ideas around the world.”
Similarly at least four innovation labs havelaunched in London that are operated or sponsored by leading financialinstitutions like Bank of America Merrill Lynch, Barclays, Citi, Credit Suisse,Deutsche Bank, and investment firms like Goldman Sachs. Even MasterCard hasannounced a new innovation lab based in Eastern Africa that, with the help ofthe Bill & Melinda Gates Foundation, will work with local entrepreneurs,governments, and other stakeholders across the region to improve financialinclusion and electronic payments adoption and innovation.
While the reasons for the globalization of FinTechinnovation probably range from ongoing immigration issues in the United Statesto cost savings and increasing market exposure among other things, I believethat the move away from Silicon Valley (which will remain a hotbed forinnovation for the future) is due in part to the growing understanding oflocalization.
This is an extract from a Mercator Advisory Group’s members’ only analysts blog. See full blog roll.