Toronto has landed in fifth place in a global survey of financial technology (a.k.a. fintech) centres and is also one of the top cities to watch for future fintech development, according to a new report from the Toronto Financial Services Alliance (TFSA).
Canada's financial capital fell behind London, San Francisco, New York and Singapore, which were in the top four, according to the study, entitled Trends and Innovations in Financial Services, which was released on Wednesday.
"Toronto is the second largest financial centre in North America, and Ontario has the second largest concentration of technology companies," says Janet Ecker, president and CEO at the TFSA, in a statement. "This unique ecosystem has created a perfect environment for a promising international fintech hub to emerge."
The report is based on the responses of 308 financial services professionals from Toronto , Vancouver, Montreal, Berlin , Frankfurt, Hong Kong , London , Luxembourg, New York , San Francisco, Singapore , Sydney and Tel Aviv and from the TFSA's own research, which was conducted in conjunction with London, U.K.-based think tank Z/Yen Group Ltd.
Toronto rose to fourth place when the professionals were asked which regions would be leading fintech centres of the future, behind San Francisco, which trumped London in this question; New York; and London.
"Toronto is developing a strong fintech ecosystem — it is a place to watch," says an anonymous pension fund manager in London, U.K., surveyed for the report.
The report also indicates what combined factors make a city viable in fintech development. The professionals surveyed state that the elements that will attract fintech companies are the availability of skilled staff, a supportive regulatory environment and access to financing.
Other elements — such as proper technological infrastructure, institutions for education and development and the attractiveness of the city — are also important to ensure that top fintech brains want to establish and maintain their businesses in that city.
Toronto and its surrounding region benefit from being the home of many incubators and accelerators as well as educational institutions, such as the University of Toronto and University of Waterloo.
Toronto will likely maintain its place as one of the top 10 fintech clusters in the world thanks to strong government support, low cost of accommodation, great cultural diversity and plenty of available capital, the report states.
As for other Canadian centres, Vancouver and Montreal landed in 12th and 13th place, respectively, when survey participants were asked to consider current fintech centres as well as fintech centres of the future.
However, Montreal has the potential to move into the top 10 as a result of its cultural diversity, availability of skilled personnel and good institutional framework, the report states.
Attracting technology start-up companies will be important in driving fintech forward, the report suggests. Close to 130 professionals indicate that start-ups are the innovators in this area while 40 professionals deemed banks to be the true innovators. Asset managers and insurance companies each received votes of confidence from less than 10 professionals.
The top three financial services areas that are likely to see the most disruption from fintech are retail banking; insurance; and wealth management and asset management, which were tied for third place, according to the report.
Overall, fintech will have the most impact within firms on cybersecurity, big data analytics and blockchain according to those surveyed. Personal financial management came in sixth place of the eight areas.
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