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Keeping up to speed with trends in technology takes time and effort, especially when it comes to financial technology or fintech as it is commonly referred to as. Money is streaming in to fintech, and everything from how we bank to how we make purchases is changing. Everyone is excited, from entrepreneurs to the man on the street, but it is venture capitalists that are exultant. The rapidly growing billion euro industry is attracting the attention of European venture capitalists hoping to cash in at the growth stage of this burgeoning sector.
Let’s take a look at some of the key trends that will shape where venture capitalists put their money in the coming years.
1. Reg Tech
The marriage between regulation and technology is not new. However, it is now becoming essential that companies use technology, as levels of regulation rise, to ensure that they stay in check with the shifting regulatory landscape. The disruption in reg tech will be driven by algorithms and analytics, using real-time information to make regulation data easily accessible. The home of reg tech appears to be in London at the moment, with most of the global players based in the UK.
It was recently announced that the EU want to pump €2.6 billion into Europe’s VC funds to close the gap with the United States. A considerable chunk of that investment will go towards the sizzlings hot AI sector. Companies such as Mapillary, who created an independent mapping data system for autonomous vehicles have already received considerable funding. PhD’s in the field can raise money, without so much as a business plan, with venture capitalists hoping to ride the artificial intelligence wave. Health, finance, and automobile receive the bulk of investment, as it stands.
3. Internet of Things
The internet of things (IoT) meet at the intersection between hardware and everyday objects and the internet. Industry experts are convinced that this will bring about the next industrial revolution. From companies like Toulouse based Adveez, who want to improve the safety of food and people to Madrid based Drone Hopper—a heavy duty drone to fight forest fires, Europe is full of potential when it comes to the IOT. Venture capital firms will provide much needed capital to support scaling and to finance growth beyond the initial growth phase.
4. Digital Neobanks
The latest type of bank on the block is the license free neobank, that offers a user-friendly digital interface. Digital technology allows neobanks to offer faster and cheaper services to the end user and they are challenging established banks for market share. Gaining customers is relatively easy for digital neobanks with just a download and away you go.
You can’t talk about fintech trends without mentioning blockchain. Venture investment in blockchain funds is tipped to grow further in 2018. Goldman Sachs classifies blockchain as being in stage one of the investment cycle; an early stage marked by a growing number of deals and amounts received. Compared to other sectors in the fintech sector, blockchain receives a small amount of investment as it remains a nascent technology. Some of the areas where blockchain could be applied include politics, the fight against illegal activity, and financial services.
According to Accenture, European Insurtech Investment Growth surpassed North America in 2017. The number of deals in Europe increased by 118 percent in 2017, accounting for one-third of all insurtech deals globally. Disruption caused by new technology in the insurance sector is likely to mirror that in the travel sector. Germany based ONE are the first Insurtech startup to have received a license to passport their services across the entire European Union. The tech deployed can make processes more efficient and inexpensive, cutting down costs that can be passed on to customers.