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Is the UK or India the leader in fintech

India Global Business Staff

The City of London Corporation's Asia Adviser analyses how India and the UK compare on financial technology leadership scales. It is widely reported that London is a leader in the global fintech industry. Undoubtedly this is true when reviewing the innovation at work across the capital and the ability to leverage the world's number one global financial centre. However, India's booming fintech marketplace is also a leader, particularly when we consider the opportunity for digital financial inclusion and the future of finance. So which centre is the leader India has been home to some remarkable innovations in a short space of time. Indian Prime Minister Narendra Modi's unprecedented demonetisation strategy in November 2016 encouraged a dramatic increase in the number of bank accounts and population on the digital grid. Sitting alongside the advent of the Aadhaar system of identity management and the innovative India Stack to promote applications to link into this new data set, this makes India's market for adopting fintech unique according to National Association of Software and Services Companies (NASSCOM). The Indian fintech software market is forecast to reach $2.4 billion by 2020 from the current $1.2 billion. This provides a great opportunity to UK fintech firms to collaborate in India′s quest to transform the lives of 1.2 billion people. India's opportunity not only lies in digitisation of processes and products that exist, but it offers the opportunity to leapfrog legacy systems. For example, India's bond market is still immature and variety in the corporate bond market tenor, yield, ratings and demand is thin. Asset management in India lacks the same opportunities for diversification as more mature markets internationally. The sheer size and geographic spread of India's population requires digital options to service in a cost-effective manner. All of these challenges and development journeys are opportunities to apply fintech solutions. Digital solutions and process efficiencies are areas where India already has great strength. Decades of international finance firms outsourcing to India their processes has increased understanding of how to drive efficiency. R&D centres across India and particularly in Bangalore have routinely produced software solutions to the world's challenges. These two strengths combined are the petrol to fuel India's fintech engine. On the other hand, the UK is home to London - the world's number one global financial centre. Many insurance companies are hundreds of years old, banking began on London's cobbled streets before it was called banking, and London's capital market has absorbed companies from across the globe to be the world's most international exchange. Being home to more than 250 foreign banks makes London an excellent place to understand how to effectively deploy fintech in a mature and borderless market. Significantly, the UK accounts for 11 per cent of the global fintech industry, with a market size of £6.6 billion. London is ranked number one for fintech by Deloitte, is home to 61,000 fintech workers and is occupied by nine of the top 50 firms globally. The UK's financial regulator, the Financial Conduct Authority, is world renowned as an innovator in their own right in terms of fintech. The world looks to London for best practice in financial regulation and the FCA has ably commuted this into managing the growth of the fintech sector. The UK has inspired continued confidence through its robust regulatory regime that also encourages innovation notably via the world-first regulatory sandbox established by the FCA. On the basis of all this comparison, the question of leadership is a close-run thing. Perhaps the question itself is flawed. In fact, the power of fintech is in bringing efficiency, security and innovation to the global financial space. This doesn't incorporate borders and rankings. It in fact begs for collaboration and sharing of innovation, thinking, challenges, and solutions, not competition and barriers. On a commercial level, there are some excellent examples of UK businesses already playing a role in India's market. The City of London Corporation and PwC have recently launched a report showcasing how both UK and Indian fintech champions can work together to accelerate the market globally. In the first in a series of reports, the focus on the payments space showcased innovation in both countries. Future publications later this year on insurtech and regtech will surely give both markets food for collaborative thought. Trade in fintech is not a future potential - it is the here and now. That is also why we are delighted that our Lord Mayor of the City of London will lead a fintech focussed delegation to Mumbai, Bangalore and New Delhi in October of this year. A high impact, high innovation, high energy programme of UK and Indian fintech leaders will create new opportunities and a stronger bridge for trade, policy shaping, regulatory understanding and new business. During Prime Minister Modi's visit to the UK in April this year, a collaboration called the “fintech rocketship” programme was launched to provide further support for collaboration backed by both countries. The City of London in its small way is also supporting collaboration through our partnership with the Indian High Commission in the UK to support fintech companies looking at trade with India. London is the world's leading financial centre and it is well placed to support the growing fintech ecosystem of India - and exchanging ideas, talent and investments between the two countries will benefit both. India will be offering fintech and local offerings to a market of 1.2 billion people who will be growing their wealth in the decades to come. Using its unique opportunity to leverage the India Stack and the Aadhaar system, India has much to offer. Therefore, it is clear that fintech is an industry where both the UK and India have valid claims on leadership. This bodes well for global innovation, trade, partnership and collaboration and solutions for all. Sherry Madera is Special Adviser for Asia at the City of London Corporation.

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