The Global Fintech Rankings 2021 report by findexable shows that the financial technology (fintech) sector has thrived globally during 2020, driven by COVID-19. The pandemic has further proven that the digitization of financial services is imperative for the smooth functioning of the economy.
Fintech exists to solve global problems. Of access – such as in emerging markets where banking economics stop the poor from getting a bank account. Of speed – where old infrastructure slows the sending of money, receipt of payments or makes international trade difficult. Or of cost and convenience – by making it easier to pay, or cheaper to borrow. SME Banking Club
The visual exhibits the top 20 countries in Global Fintech Rankings 2021. The United States and United Kingdom are still on top, with Israel moving up and snatching third position. The biggest surprise has to be Uruguay’s position on the list.
The Global Fintech Rankings 2021 – Introduction
The Global Fintech Rankings 2021, powered by Mambu, incorporated the data from findexable’s records — collected and verified by its global partners including, Crunchbase, Startup Blink, SEMrush, and 60+ fintech associations globally.
This year’s report shows the fintech ecosystems in 264 cities across 83 countries including, 20 new fintech nations. According to the report, there is a rise in the fintech industry globally, especially in emerging economies. Fintech is spreading globally, transforming the business models of financial services providers.
Fintech adoption and investment rose considerably during the recent years. The pandemic became an accelerator of fintech growth especially in emerging economies. There has been a rise in fintech unicorns from 61 in April 2020 to 108 a year later in 2021. The fintech unicorns’ combined valuation also increased this year to $440 billion from $199 billion last year.
The year also saw an addition of 50 new cities and 20 new countries in the Index. Especially, several African countries made the fintech industry more geographically diverse.
The report also states that the surge in fintech will make financial services simpler, faster, and less expensive. Besides, it will also accelerate financial inclusions in particularly developing countries leading to overall economic growth.
Global Fintech Index — How the Index Scores Each Location?
The report states that Findexable along with its data partner StartupBlink formulated an algorithm to calculate country and city rankings. The index only considered quantifiable data from reliable sources. According to Simon Hardie, CEO, Findexable, the Global Fintech Index ranked each country and city based on the following metrics:
- Quantity – assessing the fintech ecosystem size (number of fintech and fintech hubs) and supporting organizations in the ecosystem.
- Quality – assessing the performance and impact of each fintech on the entire fintech ecosystem.
- Environment – evaluating the ease of doing business in a location including determining the government regulations and interventions for improving business activities and technological infrastructure.
The Global Fintech Rankings — Country Rankings
The USA tops the Global Fintech Rankings 2021 with its cutting-edge innovative fintech ecosystems. During the first quarter of 2021, US fintech companies have raised a whopping $ 12.8 billion — a 220% increase over the same period last year. As of 2021, the country also has the highest number of fintech unicorns amounting to 81. PayPal, a US fintech company, is the world’s biggest fintech company, with a market capitalization of U.S $ 341 billion as of September 2021.
The USA has achieved this dominance in the fintech sector due to the surge in investment in fintech companies. Companies like Stripe, Coinbase, Robinhood simplify the financial technologies in the country. Similarly, digital payments processing companies like Paypal, Venmo, Google Wallet, and Apple Pay make the payment process faster, simpler, and more convenient.
The country is far ahead of the rest of the world in fintech adoption and investment. Four of its major cities were among the top 10 fintech centers in 2021. San Francisco is number one on the Global Fintech Index City Ranking, while New York bags third position.
The UK lands on the second position in the country rankings, while London holds the second position in city ranking. The country has been the global fintech leader for many years due to the constant rise in investments in the fintech sector.
It has also established itself as Europe’s fintech unicorn capital due to its million-dollar fintech companies like Transwerwise, Monzo, Revoult, and Funding Circle.
Israel grabs the third position (12th last year) in this year’s fintech index country rankings, making Singapore move to the fourth position, while Tel Aviv lands at the fifth position on the city rankings. Fintech start-ups in Israel during 2021 have raised US $ 2.3 billion in venture capital.
The country has brought major transformations and reforms in the banking sector to provide better financial services to its customers. The disruptive technological infrastructure specifically built to foster financial technology has changed the financial services in the country.
Israel is the home of many impressive fintech start-ups: Parametrix, ZenGo, TipRanks, Melio, and Empathy.
Other honourable mentions
Other notable changes in the Global Fintech Index Country Ranking include Singapore moving down to the fourth position. However, Singapore still lies in the top spot among the countries in Asia-Pacific.
Australia moved two places up at the sixth position, making the Netherlands fall to eighth position this year.
The Global Fintech Rankings showed Two Latin American countries accelerating up on the list. Brazil ranked 14th, while its fintech hub Sao Paulo being 4th on the fintech index city ranking.
The most impressive jump observed was Uruguay from 64th position last year to 17th this year. Due to its economic and political stability, the Uruguayan market is the most developed in Latin America, thus making it most suitable for fintech development. The prominent fintech companies that improved the country’s ranking include dLocal, Bankingly, Inswitch, Paganza, and Promete.
Financial Services in 2022
2021 is almost at an end — the years 2020 and 2021 observed immense digital transformations in the world. These years saw a rise in digital platforms, remote working, and user-friendly products and services to provide services at the convenience of home during lock-down. Fintech companies have thrived during the pandemic season.
According to predictions by Dmitry Dolgorukov, by 2022, fintech market value will land at $309.98 billion, more than twice its 2018 value. The year 2022 will also see major technological transformations as disruptive new technologies will change the business models of financial services providers.
As the digital revolutions in finance will further accelerate, 2022 will be the bumper year for investment in fintech. Banks facing stiff competition with tech companies will continue investing or acquiring fintech companies for survival. Similarly, financial services providers will be more willing to adopt AI and ML to enhance their capabilities, automate their services and provide smart solutions to the customers.
2022 will surely see more inclination towards open finance to reshape financial services including Banking-as-a-Service (BaaS) that allows fintech companies to offer financial services by integrating with banks through APIs. Likewise, Blockchain technology along with their smart contracts will show its potential in coming years and make the execution of any transaction more convenient.
These trends will further foster the development and growth of the financial industry and enhance financial inclusion and participation.