The 18 verticals in the European FinTech Ecosystem

Just like in the US, Europe is seeing a dramatic spike of activity in Financial Technology (fintech) Startups. After the wave of E-Commerce, Subscription Commerce, Customization, Social Gaming, Adtech and other themes – I meet a growing number of exceptional teams working on topics that disrupt banking, payment, insurance, investments – or ultimately create new financial products.

To give an overview, I want to group and classify the different types – I call them verticals though it might no be 100% correct – of financial technology startups. I can across examples of each of them, over the course of the last year.

This list is not exhaustive of course – but it should give a good feeling about what’s happening in Europe right now.

I. Payment

  1. Peer-to-Peer Payment
    e.g. payments flowing in real life from one user to the other. Could be crypto currency, bank account to bank account, or wallet to wallet transaction. Either as a feature of a product or the standalone USP of an app.
  2. Remittance
    e.g. sending money abroad easily, cheap and often circumventing existing offline infrastructures.
  3. B2B Payments
    e.g. transaction of payments between businesses, or optimizing working capital for businesses, or factoring of invoices.
  4. POS / Mobile Payment
    e.g. enabling payments electronically, often mobile phone bases, often using Bluetooth, NFC or QR Scans mostly using dedicated wireless devices or parts of upgraded casher systems at the point of sales. Also tablets or smartphones that are used as a register via dedicated applications. Also hardware that is used to accept payments via e.g. credit cards.
  5. Social Payment
    e.g. applications that allow group paying, sharing of bills on premise, mobile or via social networks.

II. Infrastructure

  1. Processing / PSPs / Acquirers
    e.g. infrastructure / SaaS models to server as a single payment gateway for clients who use this services facing end consumers, often offering multiple payments through one service. Also services which aggregate and analyze payment data, standalone or as value add.
  2. Financial Networks
    e.g. closed online circles providing members with semi exclusive content, data and network within certain financial circles like VC, PE, Hedge Funds and other investment classes.
  3. Scoring
    e.g. profiling users on public, semi private and behavioral data to derive a score, provided for others or to issue own credit.
  4. Credit / Debit Card innovation
    e.g. new forms of issuing, pooling or managing credit and/or debit cards.
  5. Crypto Currency
    e.g. applications that allow storage, mining, applying, transferring or converting of digital currencies.

III. Investment

  1. Lending (C2C, C2B and B2C)
    e.g. management of many to many, few to many, many to few or crowd based lending based on currency or crypto currencies – often without involving a regular credit issuing institution.
  2. Investment Strategy / Portfolio Management
    e.g. allowing insights, or providing services to invest into (often mirroring) public, big data or crowd based investment strategies. Also web and mobile based asset management, often using more simple underlying financial products to provide easy money management for people without time and/or expertise.
  3. Equity Financing / Funding / Secondary
    e.g. enabling companies to raise funding for equity and/or products from mostly private investors. Also platforms that allow trading of equity on the secondary market.
  4. Fx
    e.g. trading or issuing of foreign currencies, real time price optimization or services around Fx settlement, standalone or integrated in ERP systems.
  5. Financial Research and Data
    e.g. market insights – often structured – for business and private users.

IV. Personal Finance

  1. Personal Finance Management
    e.g. stand alone or integrated applications to manage, analyze and budget personal spending. Often include forecasting auto grouping of past behavior.
  2. Wallets
    e.g. stand alone or integrated applications to store and send money – mostly in real time.
  3. Insurance
    e.g. applications for brokers to manage customers, customers to manage insurances, comparing prices and or optimizing insurance situations.

Some categories have overlaps within groups – but this is the best way of clustering and categorizing in my eyes. Did I forget any groups or categories? Drop a comment and I will add it to the list.

  • Nicholas

    It feels like there is a lot of overlap in the Investment category. What’s happening with FOREX tech? Have you seen anything exciting there?

  • simonschmincke

    There is in fact overlap – as many startups don’t solely play in one field (e.g. b2b payment including FOREX) or FOREX Wallets or. There are interesting approaches like real time FOREX price comparison integrated in ERPs – something we looked into closer for some time.

  • Philippe Gelis

    One vertical, the mother of all ones, is still missing: a true fintech bank (with its own banking licence), built from scratch, to plug others verticals.

  • Jens

    I think what is really missing is – Cybersecurity (transaction security) and most importantly new, global ID verification schemes. ID verification and validation will be the “next big thing” – it drives down fraud, it helps tailoring services and offers to individuals, it creates convenience to customers, it also enables other new technologies like payments through a single fingerprint. Imagine all the data brokers and ID verification services that one single (international) merchant needs to connect to to check local IDs? a open-global ID would bring e-commerce to the next level.