The term fintech is used to define an industry and is an acronym for the words 'finance' and 'technology'. It arises from this union and integrates all those financial services companies that use the technology to offer innovative financial products and services. Fintech is rapidly changing the traditional finance sector, modifying the many ways in which we carry out our financial operations, both for individuals and companies. Can you think of any?
Don't worry, in this post we will compile the types of fintechs present in Europe. Let’s get started!
6 fintechs in Europe
Its development in Europe is very promising, where the size of the industry is growing exponentially. The secret to its development lies in the intermediation of finance in different scenarios: loans, e-commerce purchases and sales, investments, transfers and much more.
Falls are sometimes more fruitful than successes. And this is what happened with investment bank Lehman Brothers after the great crisis experienced since 2008. From that moment on, many alternative investment and financing companies began to appear to fill the gap left by traditional banking.
We show you the most relevant types of fintechs in Europe:
- Fintech to request money. Some of them allow non-bank financing in companies, without the need for personal guarantees or endorsements. An example: Finanzarel .
- Fintech to invest the money we have. These are systems that allow us to make our portfolio profitable and obtain more for our money. For example: applications to invest in cryptocurrencies, such as Bitcoin.
- Fintech to process all e-commerce payments. There are payment gateways that integrate different omnichannel payment offers and authorise payments to online businesses in order to facilitate the process for their clients. PayXpert could be a good example.
- Fintech for alternative financing. The most popular example is Crowdfunding, a source of funding used by many businesses and freelancers during times of crisis. Entrepreneurs post their projects and the amount of money required to carry them out on online platforms. An example: LowPost o Freelancer, for writing content autonomously.
- Fintech financing through Crowdlending. In these fintechs, an applicant asks for a collective loan with more flexible conditions than bank loans in exchange for returning all the money plus some interest. Bank intermediation is eliminated and the process is much more agile and simple. Example: LendingClub.
- Other fintechs. There are many other companies that offer financial services through technology. The range is very wide: direct debits and remittances, consultancy, expense management, means of payment, identity verification, for security and fraud, etc.
Although its growth has been slow and consumers find it difficult to trust new technologies, thanks to legal regulations they have been consolidating in the finance market, to the point of multiplying every year.
Users are losing their fear and gaining confidence in finance through fintech companies!
E-commerce opportunities with fintech
Online shops and financial technologies have one thing in common: the online scene. And that makes them a perfect fit. In fact, many fintechs have been developed with e-commerce in mind, as is the case with gateways and payment methods, which allow online businesses to:
- Reduce the level of credit card fraud.
- Offer payment methods tailored to your business and your customers.
- Attract new potential customers, both nationally and internationally.
- Guarantee data security.
- Streamline collections.
- Improve consumers’ shopping experience.
- Have real-time data management and control platforms.
- Centralise all payment channels in a single platform.
Now, during lockdown, both fintech and eCommerce have grown exponentially. Not only in Europe, but also on the other side of the pond. Some Latin American companies have increased their use and development, becoming the perfect opportunity to break down the barriers for their use. In Mexico, for example, there has been a great boom during the lockdown months. In other countries such as Colombia, the Government has announced its partnership with fintech Tpaga to help the most vulnerable families.
The benefits of fintech in European companies
There are many advantages to be found in fintech technology for SMEs. Technology start-ups are marking a before and after in commerce, leveraging the latest technologies to create digital financial services. It's a revolution in the customer experience, which brings:
- Greater flexibility. Thanks to the creation of new, more agile workflows, allowing data to be stored and operations to be carried out through alternative financing, among other things. Operate wherever and whenever you want.
- Cost savings. It allows automated management, so not only money is saved, but also time.
- Efficiency. Thanks to automation, more specific and result-oriented services are offered. In addition, it also allows you to improve the analysis of processes in detail.
- Transparency. By applying these technologies to our company's finance world, we increase our ability to manage them quickly and transparently.
- It allows us to trade with other countries. By using local methods in countries like China, we increase the chance of attracting this market and breaking with the rigidity of the traditional financial sector.
- European regulation of electronic payment services through PSD2. This measure is intended to increase payment security in Europe, as well as to promote innovation and encourage the adaptation of banking services to new ICTs.
In short, the financial sector is undergoing a paradigm shift in the solutions it offers, so we find great differences between this and fintech. The traditional one is much more rigid, where users must adapt to the available services; management is manual, which means that it is slower and more likely to lead to mistakes; and stagnation, due to its structure.