13 Apr


Current State of Fintech Trends in Europe

Written By Michala Kalfirtova

Being a global leader in the development of both financial institutions and financial markets, it is only natural that Europe is the birthplace of fintechs. European fintech companies are valued 2x more than any tech sector in Europe. Leading the rest of the world in electricity and internet coverage, the region specifically offers favorable conditions to boost fintechs. In addition, further technology infrastructure will bring 5G network coverage to 75% of region’s population by 2025.  Europe simply offers a business environment conducive to innovation and technology development, with several European countries (e.g., Switzerland, Netherlands and the Nordic countries) leading the 2020 Global Innovation Index.  

Europe makes up 17% of the global cumulative valuation of fintechs (around $2.26 trillion) which is also its largest venture capital investment category receiving 20% of all venture capital in Europe: a higher percentage than in Asia & the US. 

Advanced economies in Europe accounted for the largest share of non-cash payment transactions while card payments remained dominant in cashless transactions resulting in digital payments. Neobanks are seeing a sharp increase, making fintech the hottest startup sector in Europe.

The COVID Effect
The onset of COVID-19 caused unprecedented economic damage across the globe constituting significant challenges for traditional banks and their brick and mortar operations. Financial institutions were forced to quickly digitize operations in the banking sector.  Some organizations struggled to adapt, but many adopted these advancements in innovation to provide flexibility to customers during this crisis.

Fintechs created a competitive landscape by showcasing several long-term advantages to organizations and consumers with their origination in the digital world, offering more cost-efficient structures and better organizational agility. Customers rapidly became accustomed to having access to quick, easy, low-cost financial transactions and not relying on local branches for in-person transactions. 

Differentiating for Growth

While fintech companies have thrived, they do face unique challenges without brick and mortar locations to reach consumers. To acquire new customers and retain existing relationships fintech companies are expected to intently differentiate and offer unique products and features. One example is Curve, a banking platform that consolidates multiple cards and accounts into one smart card and app.

Aite Group published a research paper on fintechs which noted that Curve’s biggest challenge was educating the market while simplifying the fragmented world of finance for customers. To meet customer needs, Curve offered different product tiers, including its popular Curve Metal, a premium 18-gram brushed metal, fully contactless card available in a choice of three colors. 

Curve Metal was first launched in the UK in January 2019 and Europe in May 2020. The use of digitized options and metal cards successfully showcased the fintech company’s commitment to growth in the region and industry. Curve is now live in 31 markets across Europe, has won numerous industry awards for its groundbreaking innovations, and has grown to 300 team members across two continents.

Global Expansion and Adoption
The global fintech market is expected to grow at an annual rate of 22.17% from 2020-2025 resulting in a $305 billion valuation by 2025. European fintechs specifically have experienced tremendous growth from a 35 % adoption rate in France to as high as 82 % in Russia; higher than the average global adoption rate. This increase is partially due to online banking becoming one of the most popular payment methods in Europe. Consumers are increasingly incorporating fintechs into their everyday financial lives such as managing funds, trading stocks and crypto, paying for food, or managing insurance. In addition to the current COVID-19 pandemic, the aging population in Europe is ushering in a new opportunity for fintechs to incorporate easy-to-use services into their digital platforms. More fintechs are also responding to social and wellbeing needs of European citizens. For example, Longevity Card which uses AI-powered integration to analyze fitness activity, nutrition and other areas, provides health tips and rewards for leading a healthy lifestyle. Financial education for kids such as UK based fintech Gohenry enables the management of allowances for kids in exchange for simple activities like making their bed.

The Next Wave of Fintech

With the continued advancement of fintech, there is an exceptional amount of growth within niche markets in Europe. Leveraging new and emerging technologies to fuel innovation in the industry are the crowdfunding, peer-to-peer lending, as well as automated loans, robo-advisors and automated investment management (e.g., artificial intelligence and cyber defenses).  To meet customer needs, many fintechs are turning to the integration of cryptocurrencies, advanced card features, designs and materials including metal or a targeted focus on health, wellness and sustainability.  

Prime examples of the growing European fintech market and increasing community interest in digital banking alternatives include:

Revolut is continuously including more variety of new services including peer-to-peer payments, currency exchanges, trading stock, crypto and even commodities.  

N26 – The digitally native, German based bank is one of the earlier challenger banks who launched their first metal card in 2017.

• Bunq is an independent bank promoting sustainability with metal cards and trees planted for customers.

• Boursorama – pioneer and leader in the online brokerage, financial information on the Internet and now online banking based in France.

To learn more about the global fintech industry, best practices and common fintech challenges, please download the full Aite Group report commissioned by CompoSecure LLC: “Metal Cards: A Competitive Edge for Fintech Issuers.”