Fintech this, Fintech that. You are most likely hearing a lot about the financial technology industry these days but that’s only because it’s truly increasing at an enormous rate all around the world. Since 2009, the financial sector has seen great upheavals. The rise of Fintech has started a little more than 5 years ago and never up to this point have we experienced that amount of changes and innovations taking place in such a short span of time. Fintech is growing and the growth is accelerating, so perhaps it’s not too surprising that 2016 has been predicted to be “the year of Fintech”, which is supposed to bring the greatest amount of changes.
Fintech in Europe is a promising, dynamic and fast-growing area dedicated to creating disruptive businesses. You may be wondering what is it about the Fintech disruptors in Europe that will bring groundbreaking innovations and why is Fintech so predominantly called one of the most rapidly changing industries – so here are some of the Fintech trends in Europe that are happening:
- Global investment in financial technology ventures tripled from $4.05 billion in 2013 to $12.2 billion in 2014 with Europe being at the forefront of financial innovation;
- Venture Capital Investment in European Fintech companies reached its highest level in over a decade in the first 3 months of 2014. In 2014, the fastest growth was witnessed in Europe with an increase of 215% (year-on-year);
- From January 2010 to June 2015 more than $4,4 billion were invested in European Fintech alone (excluding London, which is one of the biggest Fintech clusters in the world);
- Fintech is one of the hottest sectors of 2016 with a lot of investor and consumer interest. There is a massive explosion of startups, and, even though most of them will fail (just a statistical fact since ~90% of startups fail), the strongest and most promising disruptors with scalable businesses will remain and will change the landscape of financial technology significantly;
- A number of countries have introduced tougher controls on micro-credit lenders; such restrictions were implemented to prevent people from falling into a pit of piling debt. Law amendments were implemented to adopt reasonable lending conditions. Regulations have made the biggest impact in Latvia and Poland. Despite increasing amount of regulations and legislative amendments, the European Union has become a hotbed for Fintech innovation;
- In Eastern Europe, the area has had a lot of developers and many of them have gained significant experience building software for US and European banks and are now utilizing experience in Fintech startup scene;
- Large numbers of young talented professionals are leaving traditional careers to start Fintech startups and a number of high-profile businesses incubators are being set up to help accelerate the growth of startups.
You may ask what does the future of Fintech hold, especially since 2016 has been announced to be pivotal year for Fintech. As Fintech in Europe is dynamic and is growing rapidly, we can only expect that responsiveness for businesses will become crucial to keep up with the growth. The competition will get even fiercer than it currently is. Winners and losers will come more frequently’ as companies’ growth cycles shorten and therefore fewer companies will be able to remain at the top for long. Over the next year – a year and a half we will likely get better insights into which new business models are overvalued, poised to grow into their valuations over time or prepped for mass-market disruption. Even though that may seem as negative notation after pinpointing such a number of growth factors influencing Fintech industry, the future of Fintech in Europe is bright and 2016 will definitely be a pivotal year to watch how the Fintech revolution evolves.