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Fintech startup in Europe stands a good chance of getting investment
The European community makes every effort to develop and stimulate small businesses. The government supports new projects and takes various steps to create a transparent financial market and healthy competition. Every year it becomes easier to launch startup in Europe. Investors are ready to invest in a promising idea. The main thing is to present it correctly.
For the last 15 years, special attention has been paid to the FinTech sector, whose products are increasingly in demand. Accordingly, new startups are appearing offering specific products. The introduction of the PSD2 directive in the European Union in 2021 was a great stimulus for the development of the sector. This requirement obliges online payments to request additional information from banking institutions to confirm the identity of the payer. The directive made the market more regulated, which had a positive impact on the development of fintech. Now startups can not only conduct transactions but also act as data aggregators.
The interest of venture capital investors is also contributing to the development of the European fintech sector. They are actively investing in start-ups and assessing the potential of the market. In addition, young projects can count on the support of accelerators, a whole network that has emerged in recent years.
Successful models of startups in Europe
These and other business incentives have paid off. According to 2022 data from the State of European Tech, there are 269 startups per 1 million inhabitants in the European Union. Many fintech projects use the BaaS model, offering customers a wide range of banking services. For example, opening cards and accounts, insurance, investment, and credit products.
A good incentive for new projects is the fact that it is not necessary to fully develop the banking infrastructure in order for the application to work. Many companies offer application builders and ready-made modules for this purpose. In this way, a startup can accelerate the product launch by 12-18 months and reduce costs by 2-3 million euros. Thanks to this approach, resources can be focused on improving the functionality and making the product as user-friendly as possible.
The BaaS model, or “banking as a service”, is used by fintech unicorns such as Revolut and Swile.
An important aspect of the development of European startups is privacy. According to surveys, 76% of customers prefer to go to financial companies that explain in detail what human data is used and for what purpose.
Hoping to retain their customers, traditional banks have started to offer their own solutions, increasing competition in the market. For a startup to gain a foothold in the industry, it now needs to present a quality product with a user-friendly interface and rich functionality. Otherwise, even with government support, the project will fail.