If a fintech entrepreneur was looking for a jurisdiction in which to begin operations, why would it choose yours?
Fintech (2nd edition)
Belgium seems to attract fintechs for several reasons.
Geographically, Belgium is at the heart of Europe and benefits from many high-speed train connections with key EU capitals (Paris, London, Amsterdam, Berlin, etc.).
As a multicultural and multilingual country (with a bilingual French-Dutch capital, Dutch-speakers in the North and French-speakers in the South), Belgium is also seen as an interesting test market for FinTech companies.
Regulators are pragmatic, are tech-savvy, have a very personalised approach of each project (unlike larger jurisdictions) and, in our experience, they adopt an open and no-nonsense approach to disruptive business models. They also accept applications in English and voluntarily translate many applicable regulations and guidelines in this language.
Finally, Belgium hosts most EU institutions and is generally a pro-EU country. Nowadays, this is a reassuring factor for fintechs which rely on their aptitude to passport their licence across the EU.
Bermuda’s Government and regulators have provided a robust legislative framework for fintech companies to use as a solid and reliable foundation to develop fintech products and services. The regulatory framework in Bermuda provides comfort to potential and existing fintech clients, which increases certainty in a developing industry. Bermuda is also an attractive jurisdiction to begin operations due to its responsive and engaged Government and regulators, the competitive pace at which they have established a regulatory framework and ability for it to adapt efficiently to international industry standards.
Brazil presents an extremely fertile market. For instance, our current market conditions feature high levels of concentration and banking spreads, high service tariffs and the prospect of regulatory modernization, while a large portion of the population is still lacking access to financial services, making Brazil particularly attractive for investing in fintechs. In addition, Brazil has a high use of smartphones and elevated levels of Internet access, which cooperates with the development of the technology sector. Therefore, there is a large sum of people prone to use mobile phones and keen to invest, the perfect equation for the growth of financial services technology.
Within the Latin American region, there are fewer obstacles to begin operations in Chile. In addition, it’s essential to highlight the role of the Corporation for the Promotion of Production (Corporación de Fomento a la Producción or “CORFO”), a Government Agency, under the Ministry of Economy, Development and Tourism of Chile that seeks to improve the competitiveness and effective diversification of Chile, through the promotion of investment, innovation, and entrepreneurship. CORFO works in different areas of interest by bringing together various programs and subsidies, some of these are in the areas of innovation, entrepreneurship, investment and financing, etc., through which both Chileans and foreigners can obtain funding, credit, and technical support in entering the Chilean market.
CORFO’s most known program is Start-Up Chile. Start-Up Chile is the leading business accelerator in Latin America. It was created by the Government of Chile to promote global technology ventures to use Chile as a platform to scale regionally and globally. Nowadays, Start-Up Chile is one of the largest accelerators in Latin America, offering financing and support alternatives for Chilean and foreign companies, with a functional product to use Chile as a platform for growth.
Finally, it should be noted that the Chilean economy is stable and strong due to the low inflation rates, and little corruption index in comparison to other Latin American Countries. The market promotes free competition and commercial openness, while the authorities take care of fiscal discipline. This sustained growth has allowed the country to sign Free Trade Agreements with markets that represent almost two-thirds of the world's population. This wide network of treaties has given rise to true international cooperation and production chains that are attractive to foreign Fintech entrepreneurs.
While the U.S. government heavily regulates financial products and services provided to consumers, it generally supports fintech innovation. In addition, access to the U.S. capital markets remains extremely attractive, despite the current issues as to regulatory jurisdiction of various state and federal agencies. Part of the attractiveness of the U.S. capital markets is the integrity of the regulatory structure. Additionally, uncertainty as to the operation of a business does not necessarily equate to the uncertainty with respect to an investor’s position in a business—many investors prefer the robust and regulated characteristics of the U.S. markets. Therefore, we expect that many fintech entrepreneurs will continue to begin operations in the United States.
In addition to the high levels of internet and mobile penetration, years of sustained economic growth and huge financial needs of the country, China’s fintech sector benefits from strong fintech ecosystems and key inputs, including a highly educated workforce, the availability of investment capital, friendly government policy and large demand. Further specific key draws of this jurisdiction for beginning operations include:
- China’s fintech market is supported by a large amount of fintech talent, including experts on both the finance and technology sides of the industry, and many professionals with top international educations and work experience.
- The high availability of capital in the Chinese market, largely from domestic investors, provides investment for fintech firms of all kinds, especially early-stage companies.
- The Chinese government has been very active in promoting innovative initiatives to support the growth of fintech companies, by offering tax incentives as discussed above and by launching its own venture capital funds to invest in the industry.
- China’s fintech sector is based on the world’s largest consumer base.
According to Finnovista, Colombia is the third largest fintech ecosystem in the LatAm region, after Mexico and Brazil. An active community exists which supports newcomers and market trend-setters alike. Current government policy is betting on digital economy growth and innovation to promote financial inclusion. Finally, Bogotá’s institutions are set on promoting the city as a the most important financial services hub for the Andean and Caribbean region by 2026.
The government has reiterated on numerous occasions its policy to support and encourage technology innovation. This policy is implemented by, inter alia, sandboxes and accelerators set up on UAE Onshore and in the Financial Free Zones.
If the fintech product is well-tested and it is a new technology used to provide a service for which a license already exists, then upon the product meeting the regulatory requirements of the authorities, the service provider may obtain a license from the relevant authorities to conduct its activities in the UAE beyond the testing phase.
Another principal reason entrepreneurs consider initiating operations in the UAE is its advantageous taxation environment.
After the legislation of the Fintech Innovation Act in 2018, the financial regulatory agency in Taiwan, the FSC, generally holds a more open attitude than that before the legislation. Since fintech projects usually involve new and un- or under-regulated practices and constantly trigger compliance concerns of a fintech entrepreneur, the sandbox mechanism in Taiwan can significantly reduce the compliance risk for a fintech entrepreneur, thereby taking the place of an early market player.
The UK has established itself as one of the leading jurisdictions in the world for fintech. It has a long history as a centre of financial services and as such has a deep network of institutions, knowledge and talent around all aspects of finance. It also has a long history of technological innovation and the creative arts, meaning that there is ample talent and networks available for people to share ideas and create new businesses; it is for this reason that the start-up scene in the UK – primarily but by no means exclusively in London – is one of the most vibrant in the world. As such it was extremely well placed from the outset to be a desirable destination for fintechs to grow – it already had the talent pools for the “fin” and the “tech” firmly in place. Countless accelerators and incubators are testament to this, and have acted as a focal point for some of the most prominent success stories.
However, there are a few additional factors that are often overlooked.
The first is political imperative. Uncertainty over Brexit has arguably spurred politicians and regulators on to introduce initiatives that will help the UK to remain at the forefront of fintech – the creation of the Open Banking Implementation Entity and the Open Up Challenge by the Competition and Markets Authority is just one example of this; the Tech Nation Fintech programme is another. Concerns over the effects of Brexit are likely to remain for some time, especially around immigration and passporting, but for any business operating in the fintech arena there are still significant advantages to setting up in the UK and taking advantage of that wave of political impetus.
The second is regulation. The UK has in the FCA a regulator that has shown itself to be both pragmatic and open to debate and engagement, which has helped numerous fintechs to bring their innovations to market far more quickly than would otherwise be the case – see question 6 for more detail on some of the measures that have been taken in this regard including the Regulatory Sandbox.
The third, more unlikely candidate, is taxation. The tax incentives and reliefs available to investors, outlined in our answer to question 8 above, provide a platform where investors are encouraged to put capital into growing businesses by reducing the risks to the investor should the business fail, which has undoubtedly contributed to the ability of nascent businesses to attract crucial early investment.
The last is engagement by major institutions, including the incumbent banks. The major UK banks have largely already gone through a process of learning to engage with small companies in ways that they have not been accustomed to doing in the past, and many have not only started to deploy fintech-like business models themselves (e.g. digital-only banks), but have also started their own fintech accelerator programmes which are aimed at fostering innovation with a view to long term partnership arrangements. Furthermore, five of the major banks and a group of major fintechs, led by Tech Nation’s Fintech Delivery Panel, recently clubbed together to produce at the end of 2019 a guide for fintechs on the best way to engage with banks and how to avoid common pitfalls. This was to our knowledge the first time in any jurisdiction that major financial institutions had gone out of their way to guide fintechs on the best ways to collaborate with them, and signals significant further development of the fintech industry in years to come.
These factors and more – in spite of and arguably because of Brexit – make the UK an excellent place to build a fintech business.
Switzerland is a stable country with a substantial and open economy in the middle of Europe but not in the EU; the fintech sector enjoys strong support by the business community. The country has a strong and mature financial market and strong service industries supporting the fintech initiative.
The federal government is very supportive of fintech and the immediate regulator Finma is recognised as competent and supportive. Furthermore, numerous networks were formed in the business community.
There is also strong support on the tech side: Google, IBM, Thomson Reuters, ETH (Federal Institute of Technology) all established research laboratories in and around Zurich, adding to the knowledge and technical innovation network. Zurich University announced that it will create 18 new chairs for digital innovation studies.
The tax environment(s) are business friendly and tax rulings are available; flexible and employer friendly labour and corporate laws complete the picture.
This favourable environment is stable, as there is competition between cantons and universities to stay ahead of the curve and pressure by start-ups on established enterprises. Hence, Switzerland is and will remain a business-friendly and supportive environment for fintech companies.
Spain currently has over 300 fintech companies, it was number five in the European ranking by volume of assets in Fintech between 2013 and 2016 and number eight in 2017.
Therefore, it seems that the late arrival of the Regulatory Sandbox has not slowed down the development of the industry and the entrepreneurial spirit of Spanish Fintechs.
One of the main attributes to this growth, was the shift in paradigm experienced with some of the incumbent financial entities, that stopped viewing fintech players as potential competitors and started to see these players as potential partners. The work carried out in this field by some Spanish banks is remarkable and they are attracting an impressive number of fintechs to collaborate with them.
As the political and legislative scenario settles in Spain, we expect that the right conditions will be implemented in order to further develop this market to allow Spanish fintech players to better escalate their models and operations under a safe and regulated environment.
The German market for financial services is large and well developed. There are many skilled specialists for both financial and technology topics. In addition, companies that master the German regulatory framework are well positioned for EU-wide scaling.
As discussed, the Korean government is promoting various Fintech areas by implementing supportive policies and creating a favourable environment for Fintech entrepreneurs. Especially, if nominated as an innovative financial service under the Special Law to Support Financial Innovation, the Fintech entrepreneur may enjoy various benefits for 2 years (maximum 4 years if extended) and use it as an opportunity to test the marketability of its Fintech technology by applying to be designated as a designated agent to handle works that conventionally belong to financial companies thereby expanding its business scope.
Also, the Korean government provides financial support for testing new technologies to promising Fintech companies up to KRW100 million. As such policy support helps to reduce the costs and risks involved in realizing new ideas and commercializing technologies, it can also be an attractive feature for Fintech entrepreneurs to operate their business in Korea.
As previously mentioned, Iceland generally has a high adoption rate for innovative trends which means that it can serve well as a test market for new products. Despite the local market being quite small it is often praised for its diversity in terms of being a good test market.
From a regulatory standpoint an operating licence granted in Iceland as a payment service provider is passportable throughout the EEA and the FSA has generally been openminded with regards to fintech start-ups as evidenced by their Fintech Help Desk.
Finally, the general regulatory environment in Iceland enables a time- and cost efficient setting up of companies and somewhat favourable corporate tax rates (20%).
It should choose ours because Portugal is becoming more innovation-driven and events such as Web Summit have attracted numerous investors and start-ups to the Portuguese market. We currently see such trend evolving and many start-ups taking advantage of an attractive work life balance kind of approach, while simultaneously benefiting from increasing initiatives aiming to increase investment in innovative areas such as fintech (please see, for example, the example of Portugal FinLab above.
FinTech has caused significant disruption in the payments landscape in India, aided by the Indian government’s push towards a digital economy incentivising digital payment transactions. RBI has recently published its Vision Statement for 2019-2021 for Payment Systems in India (Vision 2021) which recognizes the exponential growth of digital payment systems in India and lays down a framework for the next steps in the era of digitisation of payment methods- to endeavour to ensure increased efficiency, uninterrupted availability of safe, secure, accessible and affordable payment systems. Aided by regulatory and government support to move towards a cashless economy, India has a tremendous potential for continued growth in the FinTech space given the sheer number of new customers that can be on-boarded on digital payment platforms and the Government’s continued endeavours to make digital payments more accessible to give a boost to digital India. In addition, the Government of India has announced measures such as the ‘Start Up India’ scheme to encourage entrepreneurship in India which makes India the go-to space for FinTech entrepreneurs. The RBI’s regulatory sandbox is poised to be another key driver towards growth and development of FinTech space in India.
FinTech entrepreneurs should be aware that starting a business in Peru is attractive for the following reasons:
- Peru is a country with a high level of its population excluded from the formal financial system. Therefore, business models that are capable of improving the offer of financial services are required. In summary, Peru constitutes a great business opportunity with social value.
- Peru is part of the Pacific Alliance; thus, FinTech Regulation should be developed taking into account guiding principles such as the promotion of innovation in the provision of financial services, promotion of competition, regulation proportional to risks, technological neutrality, among others.
- Although in Peru several authorities are competent to regulate financial services according to the scope of their mandate, SMV, SBS, BCRP (Banco Central de Reserva del Perú) and INDECOPI (Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual), it should be noted that in the recent proposal of Law of Crowdfunding there has been coordination between authorities to implement a regulatory framework for FinTech that promotes a balance between the protection of public interests and innovation/competition in the provision of financial services for the benefit of consumers. Since the publication of the National Plan for Competitiveness and Productivity and the PNIF, it is expected that the coordination of the authorities will be constant not only with regard to the enactment of laws, but also in the development and implementation of measures in general for the promotion of financial inclusion.
- Peru is committed to the implementation of objectives that are part of the National Plan for Competitiveness and Productivity and the PNIF, which aims to promote access to and responsible use of comprehensive financial services that are reliable, efficient, innovative and appropriate to the needs of diverse segments of the population. Therefore, it is unquestionable that the Government is not only attentive and shows interest in innovative models of the FinTech industry, but also seeks to improve those aspects that hinder innovation and financial inclusion, through the implementation of measures and guidelines, such as, for example, improvements in financial education programs and digital infrastructure, promotion of the use of digital media to facilitate transactions, strengthening of credit risk centres, adaptation and development of regulations in accordance with new trends in the provision of financial services, as well as regulatory proposals that favor a environment of competition, among others.
- As part of the forthcoming Law of Crowdfunding, interesting proposals have been put forward to promote innovation in financial services that need to be reviewed, e.g. the provision of tax benefits for FinTech business models that favor financial inclusion. This shows that as part of Peru’s agenda is the reviewing and promotion of FinTech business models, as well as prioritizing the elaboration of a regulatory framework that provides security to investors and gives confidence to FinTech entrepreneurs without neglecting the protection against the risks associated with such businesses.
Israel, often considered as the Start-up Nation, is a place with a lot of technologic innovation with great entrepreneur environment. Israel is a small country and can serve well as experimental site for Fintech innovation. It has know-how resources of leading players in all fintech areas and supporting areas (like cybersecurity). People in Israel are early adopters of innovative technology and alternative financing services. Israel is one of the leading countries in blockchian technologies. Significant academic works were published on crypto-tech. There is a relatively big and active blockchain and Fintech community. More than 80 Israeli blockchain companies. Cumulative amount raised till 2018: $190M (VCs), $503M (ICOs). There is an increasing awareness of the consumers and regulators of the advantages of Fintech in Israel. Banks and insurance companies are pretty much involved in the markets. They run Fintech accelerators, innovation labs, and investment funds.  However, despite the increasing awareness, there are still some difficulties with integration with traditional banking systems.
 - Start-Up Nation Central “ISRAEL – HOME TO DISRUPTIVE FINTECH AND INSURTECH INNOVATIONS” available at https://www.startupnationcentral.org/wp-content/uploads/2018/06/Fintech.pdf
The Netherlands is a welcoming country for fintech companies. Due to its digital ecosystem and high connectivity, thanks to housing two of the largest internet exchange points in the world (AMS-IX and NL-IX), the Netherlands is home to many tech companies, including fintech companies. As the world’s second datacentre hotspot, Amsterdam is known as the digital gateway to Europe (www.digitalgateway.eu).
The Dutch financial regulators are known for their positive attitude towards financial innovation, and are actively promoting innovation and facilitating fintech companies through initiatives such as the Regulatory Sandbox and the InnovationHub. Furthermore, the Netherlands has a healthy economy and a thriving international business community (especially in Amsterdam).
The Tokyo Metropolitan Government (the "TMG") released a paper titled "Global Financial City: Tokyo" Vision - Toward the Tokyo Financial Big Bang in 2017. While it outlines various measures to nurture domestic players and attract foreign players in the entire financial sector, the TMG gives particular importance to asset management and fintech businesses and sets its aim to attract 40 foreign asset managers and fintech companies toward the fiscal year 2020.
As a part of such measures, the TMG has been holding an annual "Accelerator Program - FinTech Business Camp Tokyo" since 2017. The TMG holds such program with the goal of inviting foreign startups with cutting-edge technologies and business models to come to Tokyo and deepen their knowledge of Japan's unique market and the various needs of local companies. Further, by providing local companies the opportunity to familiarize themselves with technologies possessed by foreign entrepreneurs, such program aims to cultivate business matching and attract foreign entrepreneurs to Tokyo.
In addition, the TMG opened the "Business Development Center Tokyo" which offers foreign entrepreneurs who are considering an expansion of their businesses in Tokyo a total support package covering all aspects from business through to lifestyle issues. For foreign companies planning expansion into the Special Zone for Asian Headquarters in particular, this center provides both business exchange support and specialized consulting services. Furthermore, the "Tokyo One-Stop Business Establishment Center" facilitates the incorporation of its ancillary procedures, such as taxes, social security and immigration, for foreign entrepreneurs considering establishing businesses in Tokyo.
Also at the national government level, the JFSA launched the "FinTech Support Desk" in 2015. This is a one-stop contact point for inquiries and exchange of information on fintech. It accepts a wide-range of inquiries on various matters in finance, from those who currently operate fintech businesses to others who intend to start fintech startups.
Jersey is a long established and well-regulated international finance centre boasting a host of industry experience and local expertise, making it an ideal jurisdiction for a fintech entrepreneur.
Leveraging this existing expertise and the low-tax environment, Jersey, and Jersey vehicles, continue to be used in both established areas of finance and emerging areas. They are embracing fintech, primarily blockchain solutions (such as proptech, online settlement solutions e-ID and regtech, etc.), new areas of finance and other sectors as blockchain and DLT use cases are established.
To maintain its place as a respected, well-regulated international finance centre, Jersey is cognisant, and encouraging, of the advantages blockchain and DLT bring to Jersey’s finance industry. To that end, Digital Jersey provides support to emerging fintech talent through the Digital Hub and by providing assistance to the scheme designed to assist entrepreneurs start businesses in Jersey – "Start Up Jersey". Digital Jersey also provides assistance with a scheme to enable existing businesses re-locate to Jersey – "Locate Jersey".
Jersey's regulator, the JFSC, has shown a considered and measured approach to fintech regulation to date, which should equip Jersey to be a leading fintech jurisdiction of the future by ensuring regulation in Jersey remains appropriate and commensurate to the product or service in question.
Entrepreneurs with credible fintech projects can contact us to know more about setting up a business in Jersey.
 - www.startup.je
Apart from the favourable tax environment for companies and the high degree of political and economic stability, Liechtenstein is an excellent place for entrepreneurs to settle. Liechtenstein as an EEA member has EU-compatible regulations and full freedom to provide services in all EEA countries. Due to the traditionally close neighbourly economic relations and the customs and currency treaty with Switzerland, Liechtenstein companies also benefit from privileged access to the Swiss economic area.
Due to its size Liechtenstein offers flexibility and expediency when it comes to decision making, especially with governmental agencies and the FMA. It is also very innovative and pro-active, the establishment of the Regulatory Laboratory and the enactment of the Liechtenstein Blockchain Act being examples of this.
Liechtenstein is in general a very business friendly environment with a liberal economic policy, which is for example reflected in its labor and corporate law.
Mexico has become a suitable option for Fintech companies in the region for a number of reasons; in point of fact, the sector grew 16% last year. Such reasons include: (i) the competitive Fintech legal framework and the relevant secondary regulations; (ii) the potential reduced costs and savings in the country; (iii) the leniency of FTIs’ framework vis-à-vis banking and other financial institutions law; (iv) the exceptional robustness of foreign investment protections; (v) the strength of the banking sector and (vi) the competitiveness of Mexican “peso” against other emerging market economies’ currencies.
Luxembourg attracts plenty of leading IT and fintech companies, including Microsoft, Amazon, Rakuten, Ebay, Paypal and Bitstamp. The most important reason for this is that Luxembourg is one of the Eurozone’s leading financial centres and the second largest investment fund centre in the world. Furthermore, Luxembourg is a strategic EU location with easy access to Paris, London, Zürich, Amsterdam, Frankfurt and Brussels and has a highly educated workforce that is used to conduct business in French, German and English. Thus, pragmatism and reactivity of both politics, legislator and financial authorities are usually an overriding factor in the decision of a company to establish in Luxembourg.
On some Fintech fronts, Malta is spearheading innovative and unique reforms particularly in the Blockchain sphere. Lately it has garnered an even faster momentum in pushing forward its status as Blockchain Island by effectively quenching start-ups’ craving for regulation through the setting up of a robust principles-based regime targeting distributed ledger technology (DLT) platforms and related service providers. The new laws fill the legislative gaps in what currently is a legal vacuum, rife with a felt desired of legal certainty. Furthermore, Malta has positioned itself as a reputable centre for financial services, with a comprehensive framework overseen by the MFSA - a solution-oriented regulator, fostering a culture of open dialogue and hands-on regulation. Malta’s attraction is further underscored by its favourable tax regime which, as a result of its extensive double tax treaty network, allows investors to achieve considerable fiscal efficiency when using Malta as a base. It has a well-regulated banking sector, with several multinational banks offering bespoke solutions to clients and boasts of a highly skilled, committed workforce with the majority of students opting to follow post-graduate courses related to ICT or financial services. English as one of Malta’s official languages and Malta’s warm climate, gives fintech entrepreneurs an added incentive to choose Malta as a place to set up shop.
There are many incubator and accelerator programs, and even government channels that fintech firms can leverage for seed funding. There are funding available for new and growing businesses in Malaysia. For instance, governmental action and support for Small and Medium Enterprise (“SMEs”) have been available through policies coordinated by SME Corporation Malaysia and implemented by specified agencies of the Government and banking sector. Financial institutions like bank and development financial institutions like Small Medium Enterprise Development Bank Malaysia Berhad provide debt financing. Furthermore, there is one programme under the SME Masterplan which provides early stage financing through the establishment of investment companies to invest in potential SMEs, not limited to fintech businesses. These could assist new fintech entrepreneurs to begin its operations in Malaysia.
Apart from the above, MSC Malaysia status is one of the reasons to attract new fintech entrepreneur to Malaysia. As previously mentioned in section 8 above, MSC Malaysia status is a recognition by the Government of Malaysia through MDEC for ICT and ICT-facilitated businesses that develop or use multimedia technologies to produce and enhance their products and services. It is also a mark of world-class service and achievement and your passport and gateway to a host of privileges granted by the Government of Malaysia to the business entities.
The following are some of the incentives granted by the Federal Government of Malaysia to MSC Malaysia status companies: -
a) Pioneer Status privilege with a five (5) + five (5) year 100% exemption from taxable statutory income (on income derived from qualifying activities) starting from the date when the company starts generating income, renewable to 10 years
b) 100% Investment Tax Allowance (ITA) on new investments made in MSC Malaysia Cybercities/Cybercentres, commencing from the date on which the first qualifying capital expenditure is incurred.
c) Eligible for R&D grants (for majority Malaysian owned MSC Malaysia status companies)
d) Freedom to source capital globally for MSC Malaysia infrastructure and the right to borrow funds globally.
e) Freedom of ownership by exempting companies with MSC Malaysia status from local ownership requirements.
f) Unrestricted employment of foreign knowledge workers.
g) Duty-free importation of multimedia equipment, provided that the equipment is used by the company in the operation of its business, and not for direct sale and trading or use as components in manufactured items.
h) Globally competitive telecommunication tariffs and services guarantees if MSC Malaysia status companies are located within the MSC Malaysia.
i) Intellectual property protection and a pioneering and comprehensive framework of cyberlaws can be enjoyed by MSC Malaysia status companies irrespective of location.
Additionally, as mentioned previously, the SC has approved a number of crowdfunding platforms through which individuals can invest their money. The SC has issued guidelines for parties to operate platforms based on two concepts of crowdfunding – one involving the sale of equity in small companies, and the other for small companies to issue debt. The first is ECF and the other is P2P financing platforms, where individuals invest money in small companies in the form of debt, through licensed online platforms. The underlying premise behind P2P financing and ECF is that both allow the public to invest in SMEs or start-ups with the necessary safeguards in place.
A FinTech entrepreneur would likely choose Singapore due to the ease of doing business in Singapore, as well as the ease of using Singapore as a springboard to enter regional markets.
Singapore is ranked second amongst 190 economies in the ease of doing business, according to the World Bank’s annual ratings. This includes a low corporate tax rate of 17%. Singapore also has a strong legal system and an extremely stable political environment.
FinTech entrepreneurs will also be able to start a FinTech business in Singapore through the EntrePass scheme, which is a special work pass for entrepreneurs looking to start businesses in Singapore.
Denmark ranked no. 3 in the latest Ease of Doing Business Rank. Further, the Danish society and infrastructure in general is highly digitalised and one of the countries with the highest digital performance in the EU. The highly digitalised infrastructure of the country makes it possible to establish a company in approximately ten minutes through the website virk.dk run by the Danish Business Authority.
The population of Denmark is fast to embrace digital solutions, including fintech, and in general has a high degree of knowledge in the digital area. An example hereof is the recent report by AudienceProject, where the Danish app for mobile payments ‘Mobilepay’ by Danske Bank was ranked as the app most people would be reluctant to live without, superseding Facebook for the first time. Danes are regarded as some of the best non-native English speakers; hence, language is not generally a barrier to doing business in Denmark.
Further, there is an overall progressive movement within the fintech area in Denmark, supported by a number of corporations and interest groups, providing various opportunities for fintech entrepreneurs. The best example hereof is Copenhagen FinTech Lab, which is the leading fintech hub in Denmark founded by corporations and sponsors by a number of interest groups and corporations with interest in growing the fintech market in Denmark.
The Danish Financial Supervisory Authority is continuously seeking to ease the access to legal transparency in the area of fintech, providing guidance and setting up the FT lab, which is the Danish Financial Supervisory Authority’s sandbox initiative where selected companies can test their innovative solutions from a regulatory perspective.
Due to the country’s limited size, highly digital infrastructure and the population’s knowledge of English, Denmark makes a good business case, to enrol new projects. Easing the access to and legal uncertainties in the area of fintech is also a focus area for the Danish government and the Danish Financial Supervisory Authority.