In the fierce battle for domination of the Financial Technology scene, San Francisco could well be getting the better of London.

San Francisco: world Fintech capital?

Several different cities, not least London, like to describe themselves as the world capital of Financial Technology. In support of London’s claim, a number of accelerators have been set up there recently, and the UK capital is the base of choice for lots of Fintech startups planning to attack the European market. However, although San Francisco and – more generally – Silicon Valley, do not make the same claim, the facts show that the Californian startup hotbed is a real contender.

Silicon Valley, top region worldwide for investment

Silicon Valley is the number one region in the world when it comes to attracting investment: 56% of all global investment is made in the United States and the majority of this in the San Francisco region – over $13 billion in 2015. Moreover, around 11% of this investment focuses on Fintech.

In addition, the number of startups based in Silicon Valley is very impressive. The area boasts between 15,000 and 20,000 startups working in all kinds of fields. In the Fintech sector there are big players such as Paypal, Square and Lending Club but there is also a huge pool of promising startups which are looking to improve, or even entirely transform the banking experience.

After payments and loans, Fintech firms are moving into investment

The first wave of Fintech companies were in the payments field – Stripe being a notable one to keep an eye on. The next wave focused on lending to both private individuals and companies. We are now seeing a third wave, this time concentrating on investment. Following the emergence of a number of generalist online investment services, including robo-advisors, the United States is now seeing a trend towards ‘verticalisation’, with Lending Robot (automating investment in peer-to-peer loans), Equityzen (investment in unlisted tech-based firms such as AirBnB, Spotify and Lyft), and Philadelphia-based startup WorthFM, which has just launched a robo-advisor specifically for women. This is not to say that the actual advice given differs according to gender, but WorthFM’s unique selling point is that it provides financial education as part of the package. Studies show that many women in the United States feel they are not quite up-to-speed when it comes to investment matters and appreciate receiving some education in this field.

Areas of concern for banks = innovation opportunities for Fintech firms

Compliance with all the rules and regulations in force is of particular concern to banks, so any tool that can improve their ‘Know Your Customer’ processes is likely to be very welcome. Swiss startup Qumram, which took part in the recent FinovateSpring 2016 conference in San Jose, California, provides a service recording all customer interaction on all online channels, from WhatsApp to LinkedIn.

Meanwhile, a wave of ‘chatbots’ – robots which use artificial intelligence to interact with users – has been designed to help banks reduce their operating costs. Orlando, Florida-based bots platform Kore is an example of the work being done in this area.

And when it comes to improving efficiency, streamlining processes and saving time, we need look no further than the Blockchain, which seems set to change the whole way transactions are managed.

While the image of the Fintech sector has taken rather a knock recently with the events surrounding Lending Club and Prosper, coupled with a noticeable slowdown in investment, the Financial Technology sector nevertheless remains buoyant. Fintech firms are creating new customer standards and the banks have certainly got the message that these startups are a major source of innovation. No surprise then that banks in the United States are stepping up their collaboration with – or making acquisitions among –Fintech companies, and generally pumping investment dollars into this field.


By Nathalie Doré
CEO North America