FinTech CEO Rati Tchelidze on why Europe is dominating the Fintech sector

Europe is a hotspot for FinTech companies, and it's not by coincidence. There are plenty of reasons why Europe is the perfect place for both startups and established FinTech companies to develop. In this article, Rati Tchelidze, Founder of Axios Holding explains what makes the European continent excellent for FinTech developments. 

However, before jumping into why FinTech is doing so well in Europe, let's start with explaining what this sector is all about.

What is FinTech?

Short for financial technology, FinTech is a term used to describe the industry encompassing the technology used in financial services. Initially, this term referred to the technology used in the back-end of financial institutions. However, it grew to include many other applications that are mainly consumer-focused.

The FinTech sector has constantly been growing in recent years. The key element of FinTech's fantastic evolution is providing consumers direct access to their finances. Through user-friendly interfaces and state-of-the-art technology, consumers can find a more effective way to handle financial transactions.

The development of FinTech in Europe

The FinTech sector in Europe started to show promising figures in 2013 when companies in this sector raised nearly €3 billion. That's three times more than what was raised in 2008. Another interesting statistic shows that the UK and Ireland accounted for over 53% of Europe's FinTech investments in 2013. In present times, Europe is home to 50 of the most powerful FinTech in the world and considered the best market for FinTech Startups but what has made Europe such a great environment for FinTech?

Regulation proximity to the traditional sector

When analyzing Europe's dominance in the FinTech sector, we must start with the importance of regulation for the entire industry. Ever since 2007, the EU came with the Payment Service Providers Directive (PSD). A set of directives and action points that aimed to bring a contribution to developing a single payment market for the European Union. Even though the FinTech sector wasn't as developed as it is today, many of the directives in the PSD mentioned the use of technology and smart solutions to achieve the goal of a unified payment market. In 2018, realizing the important role of FinTech, the PSD2 was rolled out by the EU. PSD 2 came with major technical challenges for traditional banks and it offered the perfect opportunity for collaboration with FinTech providers.

Today, the non-convoluted regulations in the EU make it easier for FinTech businesses to join the game and give them the proper environment to develop. That's also the case for Axios Holding, one of Europe's leading companies within the FinTech Industry. 

On top of that, the bonus of having lots of other financial services companies there can't be overlooked. Most of the international big banks have their headquarters in London and that makes it easier for FinTech companies to interact with the traditional sector and strike partnerships for mutual development.

Plenty of support from the EU and EC

The PSD2 is not the only step taken by the European Union and the European Commission towards providing the perfect environment for FinTech. A FinTech Action Plan was rolled out in 2018 together with PSD2, and earlier this year the FinTech Action Plan 2.0 was also unveiled. The main ideas in the 2.0 version of the action plan regarding FinTech are:

●            Focusing on retail payments strategy

●            Tackling fragmentation with the use of FinTech

●            Creating a European open finance data space - a theme also present in PSD2 that will be followed-up with the European Data Strategy including the Digital Services Act

Taking into consideration the global situation and the mass flocking towards e-commerce, the authorities want to ensure that a strong regulatory framework is in place to facilitate financial innovation. And while there are plenty of actions to be taken, the sole existence of a FinTech Action Plan makes Europe the leading region for companies in this sector.