Sebastian Schäfer, co-founder and managing director of TechQuartier, a fintech innovation center based in Frankfurt, explained that his company focuses not only on financial services, but also on agriculture and food technology. He noted that it was not easy for fintechs to break through, but pointed to successes such as Trade Republic, a neobroker with €35 billion in assets under management, and digital banking . “We have a community of about 600 start-ups and we are really trying to bring innovation to the banking sector in Germany.”
Schäfer believes it’s difficult to get access to the right people at German banks. “It’s a question of trust,” but he says banks are relying on fintech solutions. His organization is trying to connect companies and is using its partner network of multiple banks “to identify their needs and challenges and then go from there, not the other way around. We’re increasing the chances of having meaningful conversations and hopefully facilitating a partnership, whether it’s an investment or a venture-client interaction.”
Three booming business areas in the Nordic countries
Thomas Krogh Jensen, CEO of Copenhagen Fintech, noted progress in fintech and sustainability, as well as SMEs and digitalization, which “often offer alternatives to the established financial industry.” Finally, as the Nordic countries are relatively wealthy, he observed several developments “in the way we manage our wealth” (alternative advice, crypto, blockchain, etc.).
Fintech is transforming out of necessity
Krogh Jensen noted that while less money has been invested in the fintech world in the past two years, the number of deals in 1is Q2 2024 is near record high. He concludes that “investors may be abandoning the high valuations we’ve seen in the past and looking to do more early-stage deals.”
Given this situation, some fintechs are diversifying away from the banking sector. For example, Krogh Jensen reported on a startup that partners with banks to offer loans for treatments at fertility clinics.
Europe: get excited about regulation
Mr Schäfer suggested that we tend to forget that regulations can be a source of opportunities and innovation for fintech companies in Europe. He referred to the which will be followed by DSP3 and the . Unlike in the past, he believes that players such as regulators, incumbents, fintechs and technology companies will need to think more in terms of ecosystems to better innovate and serve customers.
Middle East: Dubai is not the only place of excitement
“The whole region is exciting, from Morocco to Oman and Pakistan. There are huge opportunities from the west to the east,” said Nameer Khan, president of the MENA Fintech Association and founder of Fils.
Mr Khan believes the region is attracting talent from around the world thanks to easier visa procedures, including for freelancers, painless steps to setting up start-ups and simplified processes for opening bank accounts.
1.4 billion people are still excluded from digital financial services in Africa and Asia.
Sarah Corley, CEO, Alliance of Digital Finance and Fintech Associations
Counting major players such as Meta and JP Morgan among its members, it will come as no surprise if capital finds its way into fintech, a seven to eight year old industry in the region. Additionally, “fintechs from different parts of the world are now moving into the region,” Kahn explained. He believes this is the result of the emergence of a middle class with greater purchasing power in Saudi Arabia and the United Arab Emirates. As a result, fintechs are focusing on wealth, with tools such as robo-advisors, while aiming to disrupt private banking models.
Harmonization in the Middle East
Despite the lack of a passport similar to that of the EU, Mr. Kahn observed that “different countries offer much more precise regulations which, sometimes, go further than what we see in Europe.” This is a major development for fintechs in the payment services space.
Payments outside Africa
“You can’t really talk about Africa without talking about mobile money,” said Sarah Corley, CEO of the Alliance of Digital Finance and Fintech Associations. The sector is home to some of the region’s biggest unicorns, with players such as Chipper and Flutterwave.
Yet, Ms. Corley observed that “1.4 billion people are still excluded from digital financial services in Africa and Asia.” It is shocking that 70% of them are smallholder farmers, as it is considered not possible to make a profit in this low-income sector. She pointed out that no fintechs were operating in this sector.
There is hope on the horizon as Tymebank in South Africa has proven that it is possible to generate decent profits in the low-income space (80% of its customers).
In the agritech sector, Ms Corley said Hello Tractor “has revolutionized the way farmers can access equipment and support”, while DMA Africa connects farmers with cooperatives.
This article was written by in English, translated and edited by Paperjam in French.
