Financial technology has become one of the most attractive areas for venture capital, and its growth is no longer confined to traditional centres such as London, New York and Singapore. A World Finance ranking of emerging fintech hubs, published in 2019 and drawing on research from Startup Genome, picked out five locations that were building strong ecosystems: São Paulo, Lithuania, Estonia, Frankfurt and Bengaluru. Looking back at that list today helps explain why fintech has become such a global industry, and why each of these places succeeded for very different reasons.
When the list was compiled, Juniper Research was projecting that global fintech revenue would reach $638bn in 2024, a rise of 143 percent on 2019 estimates. Uncertainty over Brexit was also prompting firms to look for bases outside London, while governments around the world were competing to attract start-ups with incentives and friendlier rules.
São Paulo: Building on Distrust of Big Banks
Brazil had more fintech start-ups than any other country in Latin America at the time, and most were concentrated in São Paulo. The driver was clear: a long economic crisis and a banking market dominated by five large lenders had left many Brazilians wary of traditional banks, which they associated with high interest rates and heavy bureaucracy. Around 40 percent of the population was outside the formal banking system.
That gap created a large opportunity. Nubank, the digital bank and credit card provider, was already one of Latin America’s most valuable private start-ups, and it went on to list on the New York Stock Exchange in 2021. Brazil’s central bank also launched the Pix instant payment system in 2020, which quickly became widely used and further accelerated the shift to digital finance.
Lithuania and Estonia: Small States, Big Ambitions
Lithuania positioned itself as a gateway to the EU for fintech firms worried about losing access after Brexit. In early 2019, around 100 British financial companies applied for licences there. The Bank of Lithuania offered a regulatory sandbox for testing new products and one of the fastest licensing processes for e-money and payment firms in the bloc. The World Bank ranked the country 14th of 190 for ease of doing business in 2019, and the number of fintech companies doubled between 2016 and 2018. Revolut was among the high-profile firms to secure a Lithuanian banking licence.
Estonia’s strengths lay in its digital state. It has one of the highest rates of start-ups per capita in Europe, and Startup Genome found that 29 percent of jobs created by its start-ups were in fintech. Its e-residency programme allows entrepreneurs anywhere in the world to set up and run an Estonian company online, and the vast majority of public services are available digitally. TransferWise, which raised $280m in 2017 and later rebranded as Wise, became the country’s best-known fintech success story.
Frankfurt: Fintech in the Shadow of the ECB
Frankfurt’s appeal came from its role at the heart of the eurozone financial system. It is home to the European Central Bank and more than 200 banks, many of them foreign. That concentration of institutions provides start-ups with ready access to customers, partners and expertise.
Support structures helped. Deutsche Bank set up its Digitalfabrik in 2016 to develop digital banking products, and the TechQuartier hub connects start-ups with banks, investors and mentors. The city’s standout success was 360T, a foreign exchange trading platform bought by Deutsche Börse in 2015 for $796m, at the time the largest acquisition of a German start-up. Berlin remains Germany’s main technology centre, but Frankfurt has carved out a distinct niche in business-to-business financial technology.
Bengaluru: India’s Emerging Fintech Powerhouse
Bengaluru, often called the Silicon Valley of India, stood out as one of Asia’s fastest-growing start-up ecosystems, with 438 fintech start-ups at the time of the ranking. Online broker Zerodha had already transformed retail stock trading in India, and the country had recently overtaken China as Asia’s leading destination for fintech fundraising. Payments made up the largest share of Indian fintech start-ups, and Mastercard announced plans to invest $1bn in India over five years.
India’s digital payments landscape has since been transformed by the Unified Payments Interface, the state-backed real-time payment system that now handles billions of transactions each month. That public digital infrastructure has given start-ups in Bengaluru and elsewhere a platform on which to build new services.
What Emerging Fintech Hubs Have in Common
Despite their differences, the five locations share some common ingredients. Each combined a clear market need, whether unbanked consumers or demand for cheaper payments, with supportive policy such as regulatory sandboxes, fast licensing or digital public infrastructure. Each also had access to talent and capital, either through established financial institutions or through vibrant start-up communities.
The list also shows that there is no single model. São Paulo and Bengaluru grew from large domestic markets with underserved populations. Lithuania and Estonia relied on regulatory agility and digital government to punch above their weight. Frankfurt leveraged its existing banking infrastructure. For investors, the lesson is that the most promising emerging fintech hubs are often those where local conditions create a problem that technology can solve at scale.
Readers can revisit the original profiles in World Finance’s ranking of the top five hubs, which captured these ecosystems at an early stage of their development. Many of the figures it cited reflect conditions in 2019, so they are best read as a snapshot of the moment these hubs were gaining momentum rather than a current scorecard. Since then, higher interest rates have cooled venture funding across the sector, forcing many start-ups to focus on profitability rather than rapid expansion.
Conclusion
Several years on, the cities and countries highlighted in that ranking have largely justified the attention they received, producing globally recognised companies and influencing how regulators elsewhere approach innovation. Fintech has moved from niche to mainstream, and competition among emerging fintech hubs continues to intensify as new centres in Africa, the Middle East and Southeast Asia join the race. For investors, policy design and market need remain the best guides to where the next success stories will appear.
