Traditional financial services accounts for around 55% of Cayman’s economy, but emerging technologies – blockchain being one example – are poised to change the industry forever. Is Cayman ready to adapt?
Fintech, a mash-up of finance and technology, is a word we are likely to hear more often in years to come. In the not-so-distant past, Fintech referred to the back-end computer technology used by banks or trading firms. Over the last decade Fintech has evolved to describe a broad variety of technological interventions into personal and commercial finance, and it’s garnering a lot of investment.
According to CB Insights, a research firm that tracks venture capital and start-ups, Fintech start-ups received $16.6 billion in venture capital for 2017, up from just under $4 billion back in 2013.
Cryptocurrency and digital cash, blockchain, smart contracts, and reg-tech are said to be some of the most active areas of Fintech innovation.
At last week’s Fidelity CEO conference, Premier Hon. Alden McLaughlin and Cayman Finance CEO Jude Scott both weighed-in on the future of Fintech.
“Financial technology in my humble opinion, is the single most important thing that we are going to have to focus on in the years to come,” said Mr. Scott, as he greeted conference attendees Thursday (2 February).
He said Fintech innovations are likely to be a game changer in the world of finance.
“Not only will transform our day-to-day lives, it will transform our industry, it will transform the global industry, and Cayman is going to play, I believe, a very important role in that.
“The financial technology sector is rapidly growing, and is set to change the face of finance and business, so much so that traditional financial services firms are already getting involved,” said Mr. McLaughlin.
He said the fintech explosion is already creating opportunities for Cayman.
“The Cayman Islands is said to be amongst the top three jurisdictions for blockchain entrepreneurs to form their companies,” said Mr. McLaughlin.
Mr. Scott says the Cayman Finance Fintech innovation lab working group is more than 20 members strong.
“What we are doing is actually working to develop ways to take regulation, which is originally designed for regulated transactions through regulated intermediaries,” said Mr. Scott. “Bear in mind this technology has no intermediary, taking the elements of sound regulation and building it into the technology.”
He said the fintech sector is teeming with potential.
“It’s peer to peer, it’s fast, it’s low-cost, no intermediaries, and it has some other tricky stuff as well, which is anonymous, unregulated, but these things combine to give it a tremendous strength,” said Mr. Scott.
Cayman Enterprise City has reported a boom in blockchain startups. The Special Economic Zone told Cayman 27 that in the second half of 2016 through early January, 30 to 40 companies have set up a physical presence in Cayman to develop applications using the decentralised register technology.