Shanghai retains 3rd spot as global fintech hub

Shanghai remained in the third position in the global fintech center development index 2024 which was released on Friday.

Released for the second consecutive year, the list was released during the two-day Sixth Shanghai International Fintech Forum starting on Friday. New York continued to top the list, covering gauges of fintech development level, growth potential and overall development environment.

London retained its second place, followed by Shanghai, Beijing, Shenzhen, Tokyo, Chicago, Hong Kong, Singapore and San Francisco. While the top five positions remain unchanged, it can be seen that the gap of fintech development among these cities have narrowed, showing increasing competition in this sector, according to experts attending the forum.

Shanghai has made much progress concerning fintech application, dislodging all the other cities under this indicator. The city has also outperformed London in terms of research and development investment, innovation results and the size of information technology industry. Furthermore, Shanghai's venture capital has grown rapidly over the past year, helping it to climb up one place to the fourth spot this year in terms of fintech growth potential, according to the list.

Chen Yun, professor from the School of Public Economics and Administration at Shanghai University of Finance and Economics, said at the forum that fintech investment has been cooling down on the global scale, as artificial intelligence has attracted the most attention.

Moreover, the development of fintech centers has become more diversified. Major cities in North America, Western Europe and Southeast Asia have been taking the lead in fintech development globally, while China and the United States are more active in the innovation of fintech technologies, she added.

The Shanghai Fintech Development White Paper (2023-2024) was released by Shanghai Fintech Industry Alliance at the Friday forum.

Shanghai is home to about 2,000 fintech companies. Shanghai-based commercial banks, such as Bank of Communications and Shanghai Pudong Development Bank, have taken the lead nationwide in terms of fintech development, although the investment growth rate has slowed down over the past year, explained Li Feng, deputy dean Shanghai Jiao Tong University's Shanghai Advanced Institute of Finance.

Among all the 12 securities brokerages in China which have invested over 1 billion yuan ($137 million) in fintech development, four of them are based in Shanghai. The fintech innovation projects in Shanghai usually include the participation of various institutions and the integration of different technologies, such as the integration of AI, blockchain and cloud computing, said Li.

Under closer scrutiny, Pudong enjoys much advantage in terms of the fintech ecosystem, as a large number of financial services providers have set up operations in this district. Xuhui district in southwestern Shanghai has taken the lead in terms of the application of AI foundation models. Xuhui has also accommodated a large number of industry leaders specializing in software system integration, privacy computing and network security, he said.

Huangpu district in central Shanghai is more competitive in terms of asset management and insurance technologies. Hongkou district in the northeastern part of the city shows more competitive edge concerning innovative financial companies, asset managers and financial management service providers, added Li.

In September, the municipal government of Shanghai released an action plan to build Shanghai into an international fintech center with higher quality. The development of financial computing and the infrastructure construction for corpus, which is crucial for AI development, has been underlined in the action plan.