The financial sector has traditionally led innovation, from the invention of credit cards to online and mobile banking. The current digital shift, however, is happening at possibly the fastest pace and with the most intensity and has the potential to change everything. Fintech refers to this technologically-based process of financial innovation. The word “fintech” refers to the application of many technologies, including big data analytics, distributed ledger technology, artificial intelligence, and machine learning, to simplify, automate, and improve financial services.

Europe emerges as one of the primary protagonists in the fintech competition with more than 96 percent of consumers having access to broadband services. Europe is one of the leaders in the global financial development index and innovation index. It is home to numerous international fintech startups and well-known financial software solutions.

The European fintech scene, though, didn’t always appear to be so optimistic. Fintech investments were $1.48 billion in 2014 and $3.28 billion in 2017, respectively. In 2021, as seen in the graph below, European fintech financing hit a record high of about $13 billion. Additionally, there are already over 30 financial unicorns in Europe, indicating a developing fintech ecosystem.


The UK

With more than 4,000 fintech firms presently based there, London has thrived as a top worldwide destination for fintech startups and unicorns, second only to San Francisco. British fintech firms were successful in raising $5.7 billion in 2021.

Revolut, which is currently valued at $7 billion, is the most valuable and maybe most well-known fintech startup in the UK. This app-based digital bank provides a variety of retail banking services, including account opening, international transfers, bill splitting, and bill payment.


Germany is rated second for venture capital investment into financial technology businesses and has a vibrant fintech ecosystem with over 800 fintech startups. Investments in cutting-edge technology like blockchain and artificial intelligence define the German fintech industry.

A prominent figure in the German fintech scene is N26, a digital bank with 7 million users worldwide. N26 has raised a total of $570 million in capital after bringing in an additional $100 million in Series D. Users may create accounts with Neobank through their smartphones, track their spending, send money, and more.


Despite being a late adopter, France is now the third-largest fintech center in Europe and has raised $2.17 billion this year, more than double the amount it did the year before. Digital payments, such as credit cards and mobile payments, account for the largest category in terms of transactional value.

In actuality, Lydia, a mobile payment app, received a $131 million Series B funding round, making it the biggest fintech investment in French history. Lidya processes almost €250 million worth of transactions per month, with 30% of all people under 30 having downloaded the super-app.


Austria is regarded as a center for cryptocurrencies and is also making progress in the area of financial technology. Early on, the Austrian government and public authorities began to examine possible uses for cryptocurrencies and put effort into setting up the ideal environment for the emerging technical framework. The House of Nakamoto, the first bitcoin retail outlet, opened its doors in Vienna in 2017.

Bitpanda, which raised $170 million in a Series B round and was valued at $1.2 billion, became Austria’s first unicorn. The Vienna-based neo-broker makes it simpler for regular individuals to invest in precious metals, stocks, bitcoin, and other digital assets.


Switzerland, which was ranked first in the 2021 Global Innovation Index, is swiftly becoming a vibrant fintech center. Zurich is home to 46% of Switzerland’s fintech businesses, which make up 10% of all European fintech startups. Solutions for capital management and the insurance sector are offered by the majority of Swiss fintech businesses.

Getsafe, a digital-only insurance firm, has raised $53 million in total since its founding. Aimed at millennials, the solution provides flexible house insurance, personal property coverage, and accidental damage coverage.

The main obstacles to innovation in fintech

The financial landscape in Europe is growing, but there are still some areas where it falls behind other continents. The International Monetary Fund (IMF) found that Europe is one of the regions with the lowest acceptance rates for mobile money.

Fintech finance and alternative financing are two more sectors where Europe lags behind North America and Asia-Pacific considerably. In 2017, Europe’s share of the worldwide fintech loan volume was only 3%, at €10.4 billion.

Fintech activities and services are less established and more underutilized in Europe than in other regions for a number of reasons, according to experts, including bank dominance in the financial system, privacy concerns, and stringent standards and laws.

Significant historical banking presence

A sizable portion of the population in Asia, Latin America, and Africa is neglected by the financial system or is perhaps totally excluded from it. This creates a favorable environment for the expansion of financial software businesses that provide mobile money solutions and payment apps.

Europe has a vast network of formal financial institutions and a greater level of financial inclusion than these least developed regions of the globe. In the EU at the moment, there are 6,008 banks active, with about 1,500 banks in Germany alone. It is more difficult for suppliers of fintech services to establish a foothold in the market because of the financial system’s dominance by banks.

Privacy and security issues

Security has long been a primary concern for both suppliers and clients of financial services. Fintech businesses, which use digital platforms and technology to digitize and store customer and financial data, are a better option for hackers than banks, despite the fact that banks are an appealing target. In fact, behind healthcare, fintech is the sector that is most frequently attacked.

Security problems have been brought to the forefront by the pandemic, and the worldwide move toward remote work since this “new norm” has made it easier for hackers to exploit flaws in individual firewalls and antivirus software. Just in February, a UK-based fintech firm called LOQBOX, which offers credit score services, had a cyber-attack that led to the theft of its client’s personal information and payment history.

Differentiation of laws

The financial sector is one of the most strictly regulated in the world, and for a good reason. These rules are in place to protect financial institutions and systems, stop financial fraud, preserve consumer investments, and more.

However, problems occur when the obligations of various standards and directives—namely, PSD II, GDPR, Interchange Fee Regulation (IFR), and the AML 5th Directive—overlap. For instance, PSD II requires financial institutions to share consumer and transaction data with third parties, but GDPR requires banks to secure user data.

A primary difficulty continues to be the enormous regulatory variation within EU states. Regtech variances impede financial innovation and have an impact on customers. These variations range from discrimination against international IBANs to various Know Your Customer (KYC) regulations to redundant anti-money laundering rules.