FinTech is Europe’s most value-creative and vibrant investment sector, according to a new report from investment company Finch Capital, in partnership with venture capital research house Dealroom.
The State of European FinTech 2019 Edition finds that FinTech is Europe’s biggest investment category, with 20 percent of all global investments.
The sector is “more prevalent in Europe than in Asia and the USA”, it says. European investors dominate Series A and B funding rounds, with overseas players generally appearing in Series C and beyond.
“The report shows FinTech proven to be more than a buzzword, creating €150 billion in value, many jobs, and better experiences and products for European consumers,” said Radboud Vlaar, Founding Partner, Finch Capital.
“The next wave of enabling financial technology will be less visible, but even more value accretive as it will tackle the inefficiency of the financial industry and can easily add another €150 billion in value.”
The report analyses four verticals with the financial technology sector: Banking & Payments; Insurance; Real Estate; and Enabling Financial Technologies. The strongest investment momentum over the last decade has been in Banking & Payments, but the analysts’ data shows it is shifting to the enabling technologies, such as artificial intelligence (AI) and the Internet of Things (IoT).
However, the IoT could represent a security challenge, according to a speaker at last week’s Westminster eForum conference on cybersecurity. Professor Jeremy Watson, Director of the UK’s PETRAS Hub, described the IoT as a “feral space” containing “13 billion feral devices” communicating with each other – machine to machine – invisibly. As such, FinTech companies should be wary of introducing connected devices too swiftly into a sector that needs to be built on trust, privacy, and transparency.
According to the Finch/Dealroom report, European FinTech exits have totalled €83 billion since 2013, with the current herd of FinTech unicorns adding a potential €45 billion in unrealised value. By both of these measures, European FinTechs have created over twice the value of any other tech investment sub-sector in Europe.
“Europe’s next €10 billion-plus or even €50 billion-plus startup could very well emerge out of FinTech,” said Yoram Wijngaarde, Founder and CEO of Dealroom. “The term covers a vast space, from full-stack payment services like Adyen, to challenger banks like Monzo, to enabling tech like UiPath.
“With so much happening in the space, we’re excited to publish a comprehensive overview of the different areas of FinTech, in partnership with Finch Capital, who know the space extremely well.”
Since 2014, Finch Capital has invested in European and South East Asian financial technology, AI and IoT companies, including Grab, Twisto, Brickblock, Trussle, and Hiber. Founded in Amsterdam in 2013, Dealroom provides a global database of insights into innovative companies and venture capital investment.