Strategic coupling between finance, technology and the state: Cultivating a Fintech ecosystem for incumbent finance

Abstract

The rise of Fintech challenges established financial centres and incumbent financial institutions to rethink their strategies to remain obligatory passage points in the age of digitizing finance. To appreciate these changes, it is important to maintain theoretical interchange between developments in financial geography and economic geography, its parent discipline. In this paper, we argue that the ways in which evolutionary economic geography impacts strategic coupling in global financial networks are crucial to grasp tomorrow’s geographies of Fintech. Through an in-depth examination of Brussels, we analyse the potential of Fintech opening a window of locational opportunity in financial services. Belgium has put together a strategy to seize this window by leveraging its politically neutral image and Brussels’ existing niche in financial collaboration and infrastructural plumbing. The latter status is exemplified by the presence of global players SWIFT and Euroclear. We analyse how Belgian entrepreneurs and politicians assess Brussels’ locational resources, and strategically couple big financial institutions with small tech startups in order to cultivate a Fintech ecosystem in the service of incumbent finance, constituting a Fin-Tech-State triangle. As such, we document and analyse how the coalescence of finance and technology offers new opportunities for second-tier financial centres, while highlighting the difficulties in reaping these in practice.

Will FinTech make regional banks superfluous for small firm finance? Observations from soft information‐based lending in Germany

“…Accordingly, the coexistence of regional banks and FinTech would improve access to finance for small firms and this scenario would only imply minor changes in the small firm lending of regional banks. The second scenario is also compatible to the observed cooperation between FinTech start‐ups and banks and strategic investments of banks into FinTech (Brandl & Hornuf, ; Hendrikse, van Meeteren, & Bassens, ).…”

FinTech, economy and space: Introduction to the special issue

“…Fintech firms profit in the process. Hendrikse et al (2020) show how banks dominate FinTech in Brussels, and how law and consultancy firms participate in the ecosystem as well. This leads them to conclude that "For despite the ongoing surge in digitisation, and notwithstanding the threat of Big Tech to established finance, the emerging geography of Fintech is likely to remain anchored in a global network of financial centres in which new specialisations and niches specific to Fintech will be integrated" (2020: 19).…”

“…Sohns and Wójcik (2020) explain the challenge of Brexit to London’s FinTech industry conceptualised as an entrepreneurial ecosystem, emphasizing the role of human capital, finance, markets and government and non-government support and policy. Hendrikse et al. (2020: 17) propose a new analytical concept of the Fin-Tech-State triangle to explore tensions in strategic coupling among the three groups of actors.…”

Multi-stage collaborative efficiency measurement of sci-tech finance: network-DEA analysis and spatial impact research

“…Palmie et al (2020) illustrated the impact the FinTech ecosystem has had on disrupting the financial services industry. Hendrikse et al (2020) believed that FinTech plays an important role in the formation of the financial ecosystem. Yang et al (2021) emphasized the impact of FinTech on the profitability, financial innovation and risk control capabilities of commercial banks.…”