Global innovation in fintech
A report from Tel Aviv’s “Silicon Wadi”
Continuing with the technology-flavored focus of my most recent posts, I thought I’d share with you my impressions of a recent visit to a hub of financial technology startup activity. This wasn’t in Silicon Valley, where the technology startup world got its start over 40 years ago. While the Valley is still the largest and most influential place where technology innovation is conceived and funded, the United States doesn’t corner this market the way it used to.
April 19, 2017
A blog post by Jim Eckenrode, executive director, Deloitte Services LP
My visit was to a place that some call “Silicon Wadi”: Tel Aviv, Israel. I was there with a group of my Deloitte colleagues to learn more about “Startup Nation,” so dubbed by the authors of a recent book of the same name.
That Israel has grown as a technology development center is being recognized by many. Seven years ago, Tel Aviv was recognized by Wired as a hot spot for technology incubation.1 More recently, Fast Company listed Tel Aviv as one of the top global cities to work in technology, where it is ranked sixth, just behind San Francisco and Boston. The ranking includes quality-of-life issues (cost of living, average commute, etc.) as well as investment and growth measures (time to start business, seed funding available, and startup output).2
My experience verified these assessments. For me, the most interesting part of the visit was hearing from some of the tech startups about what they’re working on, and how they’re being helped along the way.
Changing the conventional definition of “fintech”
First, the what.
I’ve spent over 20 years hearing pitches from various technology companies, from the largest incumbents to the newest startups, about what they’re developing for use by financial services companies. And, in many ways, the presentations by these
The startups we heard from
- PayKey, a solution that supports peer-to-peer payment through various social media and messaging applications
- Voyager Labs, which has developed a way to use social media data to improve the accuracy of credit underwriting, especially for thin-file or no-file borrowers
- NICE, offering solutions to support firms’ fraud and financial crimes prevention capabilities
- Spotinst, which uses predictive analytics to reduce the cost of procuring access to cloud-based processing capacity on the spot market
- Loom Systems, providing technology that monitors operational performance of technology platforms, identifies potential
issues,and conducts root-cause analysis
- OpenLegacy, a developer of technology that streamlines legacy integration through APIs
It’s possible that only two or three of these companies would be considered classic
The innovations developed in places like Tel Aviv that can benefit financial institutions include projects that go beyond the traditional definition of “fintech.”
Creating a digital culture
The other learning for me was in the “how.”
We met these companies in incubation locations that were designed to facilitate knowledge-sharing, with combinations of open working space, meeting rooms, and a range of collaboration technologies. One location, housed within a space leased from WeWork, was sponsored by Microsoft Ventures. And the other was located in a facility called Rise Tel Aviv, which is part of the Barclays Accelerator program. We have conducted previous research looking at how financial institutions can create more of a digital culture as they look to innovate for the future. These incubator examples showed how talent management works in real terms, and one that provides benefits to incumbents as well as to the startups receiving their support.
Within the financial services industry at least, the United States may have led the way in technology adoption decades ago. Today, technology innovation is found equally in other parts of the world; the US financial services industry no longer has the market cornered. Whether evidenced by the number of cranes dotting the Tel Aviv skyline; the number of incubation sites one can find there; or the level of investment by venture capitalists, large technology companies, and incumbent financial institutions alike, my experience in Silicon Wadi seemed to support that fact.
Today, technology innovation is found equally in other parts of the world; the US financial services industry no longer has the market cornered.
What do you think?
Is your firm looking to more global locations to incubate new ideas? How are you learning about the many facets of fintech?
QuickLook is a weekly blog from the Deloitte Center for Financial Services about technology, innovation, growth, regulation, and other challenges facing the industry. The views expressed in this blog are those of the blogger and not official statements by Deloitte or any of its affiliates or member firms.