Are you playing Chess or Go? The key question for understanding financial competitiveness in Asia and Europe

Authors: Irene Pathan and Kevin Mulligan

Affiliation: Department of International Business, Entrepreneurship, and Marketing (IBEM), Queen’s Business School, Queen’s University Belfast, UK The perception of financial competitiveness in Europe versus Asia might be equated to one’s preference for the games of chess and Go.  Are you a ‘chess’ person? Methodical, rule bound, and long-term strategy driven. Or are you a ‘Go’ person? Fast, agile, and seeking to dominate the board with sheer scale. In finance, the game isn’t just about the moves you make, rather the rules you dictate. 

The 2025 global financial centers index recently revealed London as the leader in Europe, followed by Hong Kong in Asia. Although London was number two on the list overall (behind New York), its notable that the next European entry does not come until Frankfurt in 11th place. This is after five further Asian centers, Hong Kong, Singapore, Shanghai, Shenzhen, and Seoul.  These cities are all characterized by highly dynamic and fast-paced financial cultures, where innovation and high-risk/high-reward business is prized. In contrast, Frankfurt’s place in the list is indicative of the wider EU trend, as the home of the regulation-loving European Central Bank. 

Speed or Stability?

On the one hand, Europe represents the most advanced stage of global financial regulation, with the integration of industry-standard regulations such as MiFID and GDPR. These regulations work together to create transparency and standardization within the EU market. However, they also pose a challenge to maintain an innovative edge, particularly in emerging areas like green technology and digital transformation.  Aisa, on the other hand, has a more diverse regulatory landscape. Firms based in Asia thrive in a dynamic and innovative market. Centers such as Singapore, Hong Kong and Bangalore are famed for their fintech ‘sandboxes’, where firms can learn about new financial technologies and emerging trends, as well as building collaborations and testing ideas live. According to a 2020 World Bank report, the highest number of fintech sandboxes were launched in the Asia-Pacific region, with most of them focused on innovation rather than policy. Therefore, while the European market tends to favor established institutional players, Aisa provides fertile ground for disruptive ideas that reshape the industry with experimentation and entrepreneurship.

Disruptive innovation

In 1942 the godfather of innovation theory, Harvard Professor Joseph Schumpeter, outlined the concept of ‘creative destruction’. This describes the process by which new ideas (i.e. creativity) wipe out old ways of doing business (i.e. destruction), thus powering the engine of global capitalism. Following in these footsteps, the more recent Harvard supremo Clayton Christensen coined the term ‘disruptive’ innovation in 1995. Disruption captures the process where small firms with few resources upend established markets by providing simpler, cheaper and more convenient alternatives relative to market incumbents. Disruptive innovation thrives in flexible environments that allow for experimentation and breakthroughs. This begs the question, are the Go-playing Asian upstarts about to disrupt the well-established European Chess grandmasters? 

A simple example highlights the deeper trend. India has led the world on the mass rollout of digital payments systems. Sitting at a café in New Deli, you pay for your chai through the ‘Unified Payments Interface’, or UPI as its commonly known. This simple transaction might earn you scratch cards, discounts and cashback, providing additional benefits that are unavailable in the GDPR-dominated Europe. Asian smartphone apps such as Alipay, WeChat, and Paytm offer a range of services and features unavailable in Europe. These include online and offline payments with user-friendly QR codes, bill payments, and budgeting. 

The rise of such fintech services in Asia has been staggering. The Hindustan Times reporting in 2024 that more than two out of three Indians use UPI for financial transactions. In China, the same trend is seen with Alipay and WeChat, having more than 800 million people using them to make day-to-day payments. In contrast, over 50% of all transactions are still conducted with cash in many EU countries. Transactions in Europe fall under a key regulation known as the Payment Services Directive 2. This dictates strict rules making it difficult to monetize payment data. This means banks often lack incentives to fund rewards. Though Europe might not have services like UPI or Alipay, other options such as Klarna, Revolut and Monzo have been trying to adopt more real-time payment systems. However, these firms still lack the convenience and ease on offer from their Asian counterparts, which reduces scale and user-uptake. In essence, Asia pays consumers to use money, while Europe charges consumers to move it. 

Everything is local in finance.

The perception of the local population towards fintech plays a major role in establishing which financial services are acceptable in a particular region. People in the EU tend to favor stability, transparency and consumer protection. This can be seen through strong European pension systems and preference for low-risk investments such bonds and real estate. In contrast, many Asian consumers incline towards more high-risk investments such as stocks and crypto. The rapid adoption of digital payments  is characteristic of the Asian market. Indeed, Asia was the global lead in digital banking in 2023. Moreover, a 2023 McKinsey report highlighted that emerging Asian markets such as Indonesia and the Philippines have huge untapped potential for financial inclusion through mobile finance.  

Recent evidence suggests that financial supervisors are paying more attention to geopolitical risks now more than ever, regularly addressing this in their statements. Brexit ushered in a transfer of financial power from London to other European centers such as Paris and Frankfurt. Tensions between China and the US on tariffs are increasing trade costs and disrupting global supply chains. More recently, Russia’s war against Ukraine has placed significant compliance challenges in front of global financial institutions operating in the EU. Russian banks were added to sanction lists and financial institutions had to continuously monitor for new sanctions such as seizures and bans. Thinking back to the distinction between Chess and Go, these geopolitical issues lead to far more pronounced consequences for the regulation-loving EU. European institutions must scrutinize everything, leading to slower cross boarder transactions, higher operating costs and delays. Meanwhile Asia faces a dilemma. From a purely financial sense, facilitating Russia would risk US sanctions, while avoiding Russia altogether would eschew a newly available market. 

Chess versus Go.

The game of Go favored in Asia priorities speed, scale and dominance. These are characteristics of a fintech culture that does not like leaving money on the table. That brings us back to our initial question, is Europe’s chess-like precision, structured rules and resilience the right play? Or is Aisa’s Go-like strategy, characterized by fluidity, opportunistic and risky play, better suited for such a high-stakes game. In both games, the winner isn’t the one who picks the best region of the board, but the one who precisely strategizes their play. In a world where regulations, innovation, opportunities and risks interact in unpredictable ways, fintech firms and regulators would do well to take a bit from both games.