Europe Fintech Market 2022-2027

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    EUROPE FINTECH MARKET

    KEY FINDINGS

    • Customer fintech adoption in Europe is increasing rapidly compare to US.
    • Government regulation on reducing barriers and other initiatives helping fintech to grow.
    • Open banking services, security, hyper-personalisation, big data, artificial intelligence and robo-advice technologies were already underway, but the coronavirus pandemic has undoubtedly expedited many of them.
    • Checkout is now the most valued fintech in Europe followed by Klarna and Revolut.

     

    INTRODUCTION

    Europe’s high pre-existing level of financial growth can partially account for the comparatively limited size of Fintech payment and lending operations compared to US. But fintech activity is growing rapidly. Notably, consumer fintech adoption in the United States lags well behind much of Europe

     

    From the financial recession time, customers have been turning away from high-street brands toward the newer technologies of challenger banks, such as Monzo and Fidor, which together have over 900,000 customers in Europe. Since the start of 2013, 2,478 VC transactions have taken place in Europe, as per the PitchBook Platform, representing more than €8 billion in deal value. It has also been the centre of numerous technologies that have taken the world by surprise, such as TransferWise in Currency Exchanges or Zopa, the founder of personal finance lending networks.

     

    Digital payment schemes are expanding within countries, while cross-border and pan-euro region instruments are not yet common. Competition is forcing many traditional banks to adopt fintech instruments, either in-house or by acquisition. These developments could improve the efficiency and reach of financial intermediation while also adding to profitability pressures for some banks. Start-ups are pursuing platform-based approaches under minimal regulation.

     

    Europe is among the least developed regions in terms of mobile money penetration and significantly lags behind Asia-Pacific and North America in fintech lending. None of the Big-tech companies, which currently dominate the global fintech landscape, originated in Europe. But as COVID-19 pandemic emerges, new venture capital fintech investments in Europe have been growing rapidly, but the gap with the frontier region of North America remains very large.

     

    infographic: Europe Fintech Market, Europe Fintech Market size, Europe Fintech Market trends and forecast, Europe Fintech Market risks, Europe Fintech Market report

     

     

    EUROPE FINTECH MARKET DYNAMICS

    After growing more than 25 percent a year since 2014, investment into the sector dropped by 11 percent globally and 30 percent in Europe in the first half of 2020, compared to the same period in 2019. (Mckinsey & company).

     

    Founded more than three decades ago in 1999, Wirecard was one of the first companies in Germany – and Europe. It offers modern transaction services on all continents. At its peak, Wirecard was valued at 25 million pounds. The entire situation caused an uproar across Europe. It entered US market in 2017.

     

    The next wave came during the financial crisis. The customers have been turning away from high-street brands toward the newer technologies of challenger banks or neo banks, such as Monzo and Fidor.

     

    Innovations and startups

    P2P lending: an alternative to traditional banking services that are often associated with high fees. Crowdlending companies in Europe include the likes of Funding Circle, Lendico, Comunitae, Zopa, iwoca or Bondora.

    Mobile payments: after the launch of Square in the US, Europe saw the creation of multiple companies trying to tackle the problem of mobile payments. SumUp, iZettle, Jusp or SetPay are a few examples.

    Equity crowdfunding: as the investment landscape changes, there is a bigger opportunity for alternative means of financing such as equity crowdfunding. Seedrs, Companisto or FundedByMe are the leaders of the sector in Europe.

    Money transfer: transferring money between countries and currencies can be expensive, but companies such as TransferWise, Kantox or WorldRemit provide a cheaper and more flexible solution to both consumers and corporations.

     

    Government regulations

    • European regulators have focused on reducing barriers to fintech growth rather than protecting the status quo. For example, the U.K.’s Open Banking regulation requires the country’s nine big high-street banks to share customer data with authorized fintech providers.
    • The EU’s PSD2 (Payment Services Directive 2) obliges banks to create application programming interfaces (APIs) and related tools that let customers share data with third parties. This creates standards that level the playing field and nurture fintech innovation.

    A number of countries have also benefited from the spillover effect created by the prolong negotiation and confusion surrounding the exit of the United Kingdom from the EU (January 2020) – Ireland, Germany and France in particular. UK is expected to remain a key financial hub in Europe and an attractive platform for start-ups as it has good trade relationship that it has with the US and other Asian fintech hubs. FinTech landscape are going to change and the extent of this change will heavily depend on the outcome of the current negotiations.

     

    COVID IMPACT ON EUROPE FINTECH MARKET

    When lockdown was announced in various countries of Europe, the number of people buying, paying, saving, selling stocks and borrowing money online was rising. So, the interest in cryptocurrency and blockchain-based assets in general, but also the burden on insurers and their underwriters, was increasing.

     

    Large-scale digitization activities are sparked or intensified through the financial services as the sector adjusts to sudden new realities. Europe’s overall very fintech-friendly regulatory initiatives-which, in this case, aim to generate openings for new entrants and obstacles for incumbents.

     

    The current situation favours the company which can provide a ‘Buy Now, Pay Later’ solution or quick working capital for SMEs, run a credit or loan marketplace, offer user-friendly apps for personal or business banking, or built a way for users to cut costs on things like transferring money online, raising funds and other types of transactions. This is why companies like Klarna, TransferWise, Bitpanda, Checkout, auxmoney, TrueLayer, N26, Revolut, Alma are booming post COVID.

     

    It can be said that the trends of cashless future, rapid advancements in infrastructure and connectivity, open banking services, security, hyper-personalisation, big data, artificial intelligence and robo-advice technologies were already underway, but the coronavirus pandemic has undoubtedly expedited many of them.

     

    EUROPE FINTECH MARKET SIZE

    Ayden is the one of the oldest and publicly listed fintech in Europe. Its full-year 2020 earnings came in at 402.5 million euros ($488.2 million), up 27% from a year earlier. The firm posted net revenues of 684.2 million euros last year, up 28% versus 2019, as it benefited from a boost in e-commerce volumes during the coronavirus pandemic.

     

    Adyen claims ‘a smart analytics system that not only helps merchants to reject potential fraud but also validates genuine customers who might – on other platforms – find their cards are not being accepted’ – this differentiates it from other similar companies.

     

    On the customer side of the equation, Adyen focuses on ease of use. With a market value of 63 billion euros, the company is now worth more than some of Europe’s biggest banks, including BNP Paribas and Santander. It competes with U.S. firm Stripe and U.K. start-up Checkout.com.

     

    Checkout.com attracted a $450 million investment round at a $15 billion valuation in January 2021, making it the most-valuable fintech unicorn in Europe followed by Klarna and Revolut.  Checkout.com is also the fourth-most valuable privately-held fintech business globally.

     

    Started in 2012, checkout, integrates electronic payments, analytics and fraud monitoring into one platform. The company processes payments for big clients including Pizza Hut, H&M and Farfetch, as well as fintechs like Coinbase, Klarna and Revolut. The company says it has got a ‘boost in recent months from the coronavirus pandemic, which has forced many businesses to move their operations online.’

     

    COMPANIES PROFILED

    • Adyen
    • Nexi
    • Klarna
    • Revolut
    • Monzo
    • Straling bank
    • Transferwise
    • Checkout
    • OakNorth
    • Rapyd
    • Greensill
    • WorldRemit
    • Moneyfarm
    • Metrobank
    • Wefox
    • Avaloq
    • N26
    • Funding Circle
    Sl no Topic
    1 Market Segmentation
    2 Scope of the report
    3 Abbreviations
    4 Research Methodology
    5 Executive Summary
    6 Introduction
    7 Insights from Industry stakeholders
    8 Cost breakdown of Product by sub-components and average profit margin
    9 Disruptive innovation in the Industry
    10 Technology trends in the Industry
    11 Consumer trends in the industry
    12 Recent Production Milestones
    13 Component Manufacturing in US, EU and China
    14 COVID-19 impact on overall market
    15 COVID-19 impact on Production of components
    16 COVID-19 impact on Point of sale
    17 Market Segmentation, Dynamics and Forecast by Geography, 2022-2027
    18 Market Segmentation, Dynamics and Forecast by Product Type, 2022-2027
    19 Market Segmentation, Dynamics and Forecast by Application, 2022-2027
    20 Market Segmentation, Dynamics and Forecast by End use, 2022-2027
    21 Product installation rate by OEM, 2022
    22 Incline/Decline in Average B-2-B selling price in past 5 years
    23 Competition from substitute products
    24 Gross margin and average profitability of suppliers
    25 New product development in past 12 months
    26 M&A in past 12 months
    27 Growth strategy of leading players
    28 Market share of vendors, 2022
    29 Company Profiles
    30 Unmet needs and opportunity for new suppliers
    31 Conclusion
    32 Appendix
     
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