The huge demand for innovation in finances resulted in a massive rise of fintech companies in Europe. They usually offer more user-friendly solutions supported by accessible web and mobile apps. Clients are happy, companies are thriving (just look at companies like Revolut, Transferwise or Klarna) – sounds like amazing conditions for developing a fintech now, right? Let’s find out.
Why Do Data-Driven Fintech Companies Pop Up Like Mushrooms?
Big data is creating a massive change in the dynamics of the financial industry. Sound financial companies are finding new ways to leverage AI and big data, which is going to be beneficial for consumers and for financial providers across the continent.
European fintech raised over $34 billion in funding. This capital was raised due to a number of new acquisitions, mergers and buyouts. It’s likely that this figure will just continue to grow in the future. Of course, not all Fintech leaders will experience the same level of success. Some might still struggle to find investors or raise revenue.
However, there are plenty of reasons why European fintech companies are luring attractive investors with new data driven advances. Some of the unique selling points Fintech companies provide are discussed below.
First, it’s a good reputation. Over the years, many companies that were industry innovators proved that they believe in the highest safety standards (which is very important to potential customers). It was possible through introducing software products that are properly tested with assuring the best quality by extensive Quality Assurance and DevOps consulting services.
Supported by law
Secondly, the European fintech industry is supported by lawmakers. The European Union treats fintech companies very seriously – you can see PSD2 (Revised Payment Service Directive) as an example as it creates and implements open banking standards in the EU. Now, third-party services can build their solutions based on banks’ data, and with the help of APIs, they can access banks’ info and launch their products (e.g. fast payments) to their users. All this makes the whole European fintech sector much more reliable for investors.
Customers hungry for innovation
Finally, there is demand for better financial solutions. This is proven by a growing number of users (this number is in the millions now) and their quick acceptance for any novelties available on the market. Customer-centric fintech companies are more than happy to deliver new financial experiences – from creating accounts online (no need to go to a bank and fill in loads of forms), to beautifully designed and functional apps. Fintech companies think about the individuality of their clients too – rather than offering more one-size-fit-all solutions. Customers can choose from diverse solutions and build a set of services that fit their needs and lifestyle. All that is topped up with “traditional” services like payments, loans, mortgages, retail investment, consumer banking, remittance, Forex trading, equity financing, insurance services, etc.
However, this innovation has to prove its value to customers. Some Fintech companies have struggled to do so, such as Greensill. This company recently suffered a series of defaults. This shows that some companies ride the coattails of the big data name, while failing to provide sufficient long-term value.
The boom on software development for the finance industry
CEOs of the most popular European fintech companies agree that they couldn’t have succeeded if it wasn’t for well-qualified and creative software creators and developers. There are over 6 million developers in Europe and they have the reputation of being the best in the world in terms of coding skills, education level and English language proficiency. Combine this with much lower labor costs than in the US, Scandinavia or the UK and you’ll understand why many Eastern and Central European countries have become thriving outsourcing centers for global businesses. What is more, developing fintech software products for the European market make local engineers acquainted with new laws such as GDPR or aforementioned PSD2.