The Growth of the European Fintech Ecosystem

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One of the most important developments in the financial sector in recent years is the increasing importance of Fintechs. For years now, countless financial services start-ups have been sprouting up from the ground, competing with the established financial institutions with extensive digitalisation and innovative ideas. The growth prospects of this industry are considerable.

A wave of FinTech innovations is driving the race to create ecosystems that offer added value to European consumers.

Therefore, FinTechs and their ecosystems are becoming more mature, and the amount of investment in established financial start-ups is increasing. In the field of consumer finance, established banks should also become even more active in order to be able to compete with FinTechs in a growing and profitable market.

Rise of the Fintech sector

European consumers are big FinTech fans; their enthusiasm inspires new approaches to offering financial services. The use of FinTech applications has increased significantly across Europe in the last two years.

The acceptance of FinTech among digitally active consumers has reached 73 per cent in the Netherlands, 71 per cent in Ireland and the United Kingdom and 64 per cent in Germany, Sweden and Switzerland: this is in line with or even higher than the global average of 64 per cent, as the EY Global FinTech Adoption Index 2019 shows.

The high user rates show that European consumers are increasingly incorporating FinTech offers into their everyday financial life.

Fintech infographic
In Europe in 2019.

The young generation as drivers of FinTech success

The increasing trend of FinTechs and digital solutions around banking plays into the hands of the younger generation’s affinity for technology: young people, who grew up with computers, internet and media, are not afraid to try out innovative solutions that would give them new advantages and comforts in life.

The FinTechs convince with their product solutions with sophisticated innovations, such as special features or easier handling and operation, which arouse the interest of potential bank users. The younger generations in particular feel visibly at ease with the user experience.

Open API economy

As acceptance of FinTechs has increased across Europe, they have grown in size, scope and complexity. FinTechs have evolved from small rebels in the industry to important and serious competitors, often with a pan-European or global reach.

Some European digital banks have gained considerable traction in regional and global markets, attracting millions of customers since their launch a few years ago.

Europe’s irresistible banks and insurers are not standing lazily by in the face of this new competition. In recognition of the powerful role FinTechs can play in improving the customer experience, they have intensified the development of their own FinTech offerings. They have also partnered with FinTechs in ecosystems.

One of the key drivers of FinTech’s rapid growth in Europe is the adoption of the European Union Payment Services Directive, known as PSD 2. The Directive requires banks to establish Open API (Application Programming Interface), i.e. open interfaces for programming applications.

This allows customers to exchange data seamlessly with third-party providers, including FinTechs, who may be able to offer them better and more cost-effective services.

Cooperation to form ecosystems

Intelligent networking has always been an indispensable tool for lasting and sustainable success. But especially in the context of digitisation, the establishment of cooperation networks supports the focus on one’s own core competence and the expansion of the innovative ability of companies.

Future-oriented business models are characterised by targeted cooperation at all levels. The involvement of specialised partners in the development of digital processes not only creates valuable impulses and resources for its own innovation processes, it also significantly increases target group accuracy.


As FinTechs continue to influence the financial industry in Europe, the suppliers of all sizes join forces to form ecosystems. Banks, aggregators and financial management applications that challenge digital technology increasingly offer a market model in which customers – both consumers and small and medium-sized enterprises – have access to third-party suppliers of credit, investment, insurance, mortgage, financing, pensions and much more.

The future of Fintechs is to merge with the old players. They will have to go on a course of cooperation with the traditional financial institutions to be successful themselves. Three-quarters of Fintechs now see their primary business objective as working with traditional financial institutions.

With less speed towards the future

Like many other industries, the financial sector was severely affected by the effects of the Covid-19 crisis. Start-ups that are still in the early stages of their development and those that need capital to expand their business are particularly affected.

In addition, due to the sharp decline in demand in the P2P and retail banking business, some question marks are currently hanging over large parts of the financial sector.

The last weeks and months have once again contributed to the acceleration of the already rapidly progressing digitalisation. In concrete terms, this is reflected in the growing number of users of e-commerce and digital financial services. Both are currently able to capture shares from their stationary competitors which they will probably not be able to give up even after the end of the crisis.

In the coming months, most Fintechs will increasingly focus on keeping as much liquidity as possible together. However, the Fintech sector is likely to be one of the big newcomers at the latest when the next boom begins.



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