A new study from McKinsey & Company suggests that European fintechs are experiencing an “existential crisis” as venture capital funding plunges “from surplus to scarcity.” The report compares the 11% drop in funding for fintech worldwide in the first half of the year with Europe’s far steeper decline in fintech funding of 30% over the same time period, and puts the blame squarely on the economic and social impact of the coronavirus.
But while the report anticipates a significant contraction in European economies – 11% this year with pre-crisis levels remaining elusive until 2023 – and that fintech is “already feeling the squeeze”, the authors note that there are a variety of advantages fintech has that could enable the industry’s most innovative players to emerge successfully if not stronger on the other side of the crisis. Among the main factors are:
- The fintech sector has grown over the past six years by more than 25%.
- Fintechs are native to the digital realm.
- Fintechs are more efficient than many other businesses: with more efficient cost structures, “organizational agility,” and significant customer loyalty.
“As more incumbents struggle to adapt, the winners will be those that quickly recognize the changed context and that are most capable of responding with clear decisions and bold actions,” the report authors note. “Many organizations, both incumbents and startups, have adapted with surprising quickness and rapid decision making through the COVID-19 crisis. This new sense of possibility and potential should inform future action.”
Speaking of Europe – and on the heels of the big news of Yandex‘s agreement to buy Russian digital bank Tinkoff for $5.5 billion earlier this week – we took a look at our favorite Russian fintechs. Check out our Baker’s Dozen of fintechs from Moscow, St. Petersburg, and more.
To learn more about fintech in Russia, here’s an overview from last December that cites an Ernst & Young study that calls the country’s fintech industry “the third most developed market in the world.” This is based on the relatively high, 80% adoption rate of fintech services in Russia, and occurs despite a relatively low participation in fintech areas like securities investment, as well as savings and financial wellness.
“Basically we went from savings books to payments over mobile phone almost overnight,” said Roman Prokhorov, the head of the association Financial Innovations, who was quoted in the study. “Therefore, our consumers are more receptive to fintech innovations, and this explains the popularity of these services.”
Here is our look at fintech around the world.
Latin America and the Caribbean
- JPMorgan Chase-based Brazilian fintech FitBank Pagamentos Electronicos plans expansion to the U.S. in the first half of 2021.
- TechCrunch profiles Jefa, a challenger bank that caters to women in Latin America.
- IFLR looks at the role regulators in Costa Rica will play in the development of the country’s fintech industry.
Asia-Pacific
- Vietnamese credit scoring technology provider for micro, small, and medium-sized businesses Kim An Group secures Series A funding.
- Could Malaysia be the “world pioneer” in Islamic fintech? Malaysia Digital Economy Corporation chairman Datuk Wira Rais Hussin makes the case.
- The Business Times of Singapore highlights an S&P Global Ratings report on Thai consumers pushing Thai banks to embrace fintech.
Sub-Saharan Africa
- Mono, a Nigerian API fintech startup that seeks to be the “Plaid of Africa,” raises $500,000 in pre-seed funding.
- Lexology reviews the current state of fintech regulation in Kenya.
- Innovation consultancy Beta-I partners with Angola National Bank to build the nation’s first regulatory sandbox.
Central and Eastern Europe
- German fintech Vanta teams up with Marqeta to launch its credit card for startups.
- Open banking platform Raisin partners with German financial solutions broker Procheck24.
- Samsung, Visa, and Solarisbank AG work together to bring Samsung Pay to Germany.
Middle East and Northern Africa
- Commercial Bank of Kuwait teams up with Thales Digital Solutions to drive mobile payments.
- Could Saudi Arabia top Dubai in terms of fintech funding? Arabian Business looks at the growth of fintech in the Kingdom.
- PYMNTS profiles Imad Aloyoun, CEO of Jordan-based payments platform Dinarak.
Central and Southern Asia
- A joint project between U.K.-based Checkout.com and Pakistan’s National Institutional Facilitation Technologies (Nift) will bring new international payment options to the Pakistan.
- Pakistan’s Silk Bank announces a partnership with MasterCard to boost credit card issuance in the country.
- Times of India profiles Indian fintech MoneyTap, founded by Anuj Kacker.