The key for their success seems to be scaling both nationally and internationally. This is easier for home countries with enormous markets such as the US and China. Furthermore we see a business-first mentality in both countries. In the US, there is a relatively mature FinTech community, capital is abundant across the growth lifecycle (with experienced VC and PE communities), and new regional hubs (outside of California and New York) are anchored on industry specialization and university connection leading to a large pool of talent. With a current FinTech adoption of only 46%, much more growth is expected.
In China – and more specifically Hong Kong – there is a growing presence of non-financial services players in the FS market. There is also a well-established financial services hub where 70 of the top 100 global banks have a presence, providing strong access to ‘Fin’ talent.
What does this mean for The Netherlands? We have a relatively big and mature FinTech sector, and FinTechs value The Netherlands for our English language proficiency, our digital infrastructure and open culture. Amsterdam in particular is valued as a European startup hub, and with a high FinTech adoption level, our country is attractive for both startups as VCs and PEs.
The majority of FinTech services being used – globally and in The Netherlands - re money transfer and payments services. Payments are here to stay and the following trends are likely to remain pertinent:
- Invisible payments: Customers expect a seamless shopping experience and will be frustrated by payment solutions that require any effort (e.g. entry of payment data). Lines between shopping and paying continue to blur with the payments system operating in the background;
- Artificial Intelligence (AI) and Machine Learning (ML) in product lifecycle: The use of AI and ML is set to move beyond helping combat fraud and improve operations to providing granular insights across all areas of the payments value chain;
- Open banking: The sharing of data enabled by open banking allows organizations to work together to improve processes across the payments chain – from Know Your Customer (KYC) to fraud, rewards, and marketing;
- Digital identities: The use of biometrics, in combination with other verified data, can help build digital identity (ID) solutions that help payments providers more efficiently and safely verify customers’ identity.
In line with these payments trends, growth is expected on embedded finance (e.g. pay now and pay later programs, embedded insurance options) and Banking as a Service offerings.
(source: Dutch FinTech Census 2019; UK FinTech: Moving mountains or moving mainstream; CB Insights; EY: Seven themes impacting the future of payments; EY analysis)