New Business Models and Emerging Technologies Transform the European FinTech Market

Estimated reading time: 2 minutes

Frost & Sullivan’s European FinTech Market Outlook, 2018 outlines the trends in the rapidly evolving European FinTech industry for 2017 and 2018. Growth can be attributed to an ecosystem comprising of innovative start-ups, traditional financial institutions willing to digitalise, investors identifying growth opportunities and proactive regulators. Incorporation of emerging technologies such as Artificial Intelligence (AI), Machine Learning (ML), Big Data and analytics, and Internet of Things (IoT) to transform solutions enables companies to meet demands of digital consumers, including ease of use, on-the-go access and customisation. The financial services vertical is subjected to stringent regulatory and compliance measures; market participants are particularly focused on security of data and data privacy, and are also making use of these advanced technologies. Frost & Sullivan’s study covers technology trends in Europe and their impact on the industry. It also examines trends in BankTech, InsurTech, RegTech, PayTech, and WealthTech, and forecasts growth opportunities in each segment.

"Going forward we can expect FinTech companies to increase focus on, and participate in, research and proof-of-concept research in technologies such as blockchain and quantum computing," said Deepali Sathe, Senior Industry Analyst, ICT, Frost & Sullivan. "Meanwhile, developments around platforms, AI and ML will deliver exciting new opportunities.”

As the influx of start-ups and innovative solutions transform the value chain across segments such as PayTech and InsurTech, traditional market participants are acknowledging the need to be agile. Frequent changes and updates in regulations and compliance requirements, and events such as Brexit, highlight the need for flexibility.

As companies struggle to meet the deadlines and requirements of General Data Protection Regulation (GDPR) and revised Payments Services Directive (PSD2) in 2018, it underpins the growing demand for RegTech, which is expected to grow to more than $500 million in 2018.

"New business models and the growth of customer-centric solutions will create opportunities to offer new services or X-as-a-Service (XaaS)," noted Sathe. "These models automate processes and integrate with existing IT infrastructure to drive overall growth. Furthermore, multiple market segments such as small and medium enterprises (SMEs), expats, and people with short credit history that are either underserved or unserved have begun to offer additional business opportunities."

Companies are increasingly exploring options for partnerships and strategic investments to ensure faster time to market to meet consumer demands of 24/7 access and enable an omni-channel approach. APIs and shared economy will have an industry-wide impact, as the new ecosystem encourages a collaborative approach.

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