New European fintech hubs are on the horizon

BI Intelligence

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The European fintech scene has long boasted two leading hubs — the UK and Germany — but as the industry continues to expand, new centers are coming into play across the region, according to new data from CB Insights.

Sweden and France in particular are two geographies winning an ever-bigger proportion of European fintech funding in deal number terms.

• Sweden's deal share of the European fintech investment market is growing for the third consecutive year. Its share expanded 2% between 2015 and 2016 to reach 8%, and currently stands at 12%, meaning it's already ahead of last year's figure. The country's share of deals is also increasing ever-more quickly, from 2% over 2015-2016 to 4% between 2016 and 2017 year-to-date (YTD). This healthy performance is possibly being driven by high-profile homegrown successes such as Klarna, whose media exposure may be attracting more investors to the country.
• France is also seeing its deal share increase for the third year in a row, and like Sweden, its 2017 YTD share (11%) has already overtaken its 2016 figure (10%). However, its deal share growth has slowed down slightly, from 4% during 2015-2016 to 1% between 2016 and 2017 YTD. The country is also behind deal leaders like the UK, Germany, and Sweden in absolute terms. That said, France's government has been intensively trying to boost the country's fintech appeal, with measures including the introduction of "tech visas" for entrepreneurs. Such improvements may help it achieve a steady pace of growth.

The emergence of new fintech hubs points to a fundamental shift in European fintech. As more countries and cities across Europe begin seeing boosts in fintech development and investment, arguably the term "fintech hub" will soon come to mean little. Instead, it increasingly seems that countries that were initially slower to get off the fintech starting block, including France and Sweden, are simply catching up with a new standard — a fintech industry increasingly inseparable from a country's main financial services industry. As such, we will likely see fintech deal numbers become more evenly spread between different geographies.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on fintech profitability that:

• Explains why the profitability question is increasingly being raised.
• Outlines why fintechs in different segments are failing to turn a profit.
• Gives examples of just how large some fintechs' losses are. 
• Explores how fintechs are striving to solve the profitability problem.
• Outlines vital considerations for fintechs and their investors.

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