The European Fintech Industry Is Growing

Technology is really spurring on the finance and trade growth of the world as we know it. Reports have shown that trends that would not have been accelerated before now are being moved forward faster than ever. Funding has been raised and a lot of fintech start-ups have been pushed forward. Bigger and bigger brands now have more ambitions than ever. Reports have also demonstrated that the fintech sector in Europe is growing more and more by the year and it would seem that more and more companies are looking to invest in it as well as the leaders.

The data has been analysed for the new tech era and it has spanned everything from funding to exit deals. It would seem that the European fintech industry has been able to raise over 3.5 billion Euros in the last year or so. This is fantastic to say the least and it just goes to show how much progress has been made over the years. Previous research has shown that the fintech industry is growing in Europe and that this is where most of the funding flows to.

This is being done across all of the stages and right now it looks like it’s in the later stages. Even though sites such as Tech.eu have only been tracking four of the fintech financing deals that took place in Europe- it would seem that this has multiplied by 5 in the year 2019 alone.

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The European Fintech Market

After the market grew more than 25% since the year 2014, it would seem that the investment sector has dropped by over 11%. On top of this, it has dropped globally as well as in Europe. The year 2020 looks to have stalled a bit. Wirecard was one of the very first tech companies in Germany and in Europe too. They are able to offer modern transactions across nearly every continent.

When you look at their peak, you will soon see that they were valued as being worth well over 25 million. Their situation caused an uproar. Customers have been very much turning away from high-street brands and they have been pushing things towards the newer tech that is out there. You also have neo banks, which include Fidor and Monzo. It’s interesting to see that other platforms such as review websites are booming in the current economy as well, which just goes to show what a powerful transformation the fintech industry is undergoing right now.

Innovations and Start-ups

P2P lending is very much an alternative when it comes to traditional banking services. They are also normally associated with very high fees as well. Crowdlending companies that are in Europe happen to include Zopa, Funding Circle, Comunitae and more. Taking a look at mobile payments, you have the launch of the company Square as well. Europe saw the creation of various companies and they all tried to tackle the issue of having mobile payments. iZettle, SetPay, JUSP are just a couple of examples. Equity crowdfunding is also going to change the investment landscape quite a lot as well. it would seem that there are now bigger and better opportunities out there if you are an alternative lender.

With money transfers, it would seem that transferring money between countries and currencies can be expensive but companies that include Kantox, WorldREmit and even TransferWise are all able to provide much cheaper and much more flexible solutions to both companies and customers. This is fantastic to say the least and it would be interesting to see how much this shapes the landscape for the future.

Regulations

European regulators have been very much focused when it comes to reducing barriers. They are trying to close the gaps and they are also trying to help fintech to grow as well. Open Banking regulations currently require the nine big banks in the country to share their customer data with authorised providers in the industry of fintech. The EU’s payment service directive helps banks to create applications with programming interfaces. You also have related tools which give customers the chance to share their own data with various third parties. This helps to create standards that ultimately help to level the playing field while also nurturing fintech innovation.

A number of countries have also been able to benefit from the spillover effect. This has been created by the prolonged amount of negotiation as well as the confusion that is surrounding the exit of the UK from the EU. The UK is set to be a key financial hub when it comes to European tech and it is also a very good platform for those who want to start up too. You also have a very good start-up relationship with the US and various other fintech hubs. The fintech landscape, it would seem, is going to change but at the end of the day, the extent of this change is going to depend on the outcome that is going to come from the negotiations currently.

Tech and Market Impact

When the year began, it would seem that there was a huge number of people who were buying and selling stocks. On top of this, more and more people were borrowing money too. Interest in blockchain and also cryptocurrency was on the rise, but the issue with this is that insurers were also under much more of a burden. The amount of decisions that underwriters had to make was increasing by the month and this put a lot of pressure on the industry. Large-scale digitalisation sparked and then intensified financial services and it forced the sector to adjust to a new and very sudden reality.

Europe’s fintech industry initiatives aimed to try and get new openings for claimants and it also created a lot of new obstacles for incumbents as well. At the end of the day, the current situation tends to favour the company which can favour more of a buy now and pay later solution. This is why companies such as Klarna or even TransferWise are booming in the world we are living in right now. It can be said that there is a trend of a cashless future and that rapid advancements are being made in the digital infrastructure in general. A lot of this is being done through connectivity and it’s also being done through open banking services as well.

This article does not necessarily reflect the opinions of the edtitors or the management of EconoTimes