Digital Wall Street has a new home, it’s not New York

THE US is about to lose its dominance in financial technology (fintech).

While the world’s most powerful nation continues to hold great influence over both the financial and technology sectors, combining the two will be the domain of Asia within the next few years.

Data from research consultancy CB Insights show that while North America (chiefly the US) still does more venture-capital (VC)-backed fintech funding deals than either Europe or Asia, momentum is against it. Thanks to a few marquee rounds, such as a SoftBank Group Corp-led US$1.4bil investment in Indian payments company Paytm, Asia retook the crown by funding amount last quarter.

Asia is already home to the world’s biggest fintech company by valuation – Chinese peer-to-peer lender Lufax – and has a handful of other unicorns in its stable.

One of the most important data points from CB Insights’ research is the preponderance of early-stage fintech firms attracting funding. More than two-thirds of all VC-backed deals in Asia were at the seed/angel or Series A round stage, versus 52% in the US. That shows a very strong pipeline of new ideas, and new startups that will draw more money in coming years, breeding more unicorns.

Many are developing blockchain or bitcoin-related ventures, including digital wallets and distributed ledgers. And remember, beyond the data collated by CB Insights is the vast investment flowing into initial coin offerings, funded not by direct cash but by cryptocurrencies such as ethereum.

Some of that money has come from existing funds circulating in the crypto-economy, but a rise in the price of ethereum and bitcoin against the US dollar shows a lot is from fiat currencies.

While this crypto boom will end, and badly, what’s left over will be a solid infrastructure that will become embedded in many facets of the finance industry. Thanks to measures taken in Singapore to encourage blockchain companies, along with the relatively laissez-faire approach taken by Chinese regulators and founders (for now), and the existing bitcoin infrastructure, Asia has become a hub for blockchain business development.

All this means that while New York remains host to Wall Street and its bankers, a new digital Wall Street is being created in Asia. And that’s where the next wave of technology and banking talent will flock.