The European Fintechs Hubs intensify collaboration amid COVID19 crisis
Seventeen fintechs hubs from the Talent Route, federating more than 3000 fintechsin Europe (from Portugal, Spain, Italy, France, Germany, Luxembourg, the Netherlands, Scotland and Denmark), have decided to intensify their collaboration, in order to assess and counter the impact of the COVID19 on the European Fintech Industry, to share best practices and to define the best actions to mutually support the ecosystem.
Devastating shock wave, unless you know how to surf
Like most business sectors in Europe, the Fintech industry has been deeply impacted by the Coronavirus outbreak. Many startups saw their business relations put on hold, established financial firms giving priority to business continuity over innovation. Due to the current uncertainty, contractual relationships between incumbents and fintechs are at a stand-still.
It is still too early to assess the full impact on the industry but already some hubs have said that between 10 and 15% of their startups are at risk of bankruptcy, which represent hundreds of businesses and thousands of jobs.
Some fintechs managed to ride the wave, in Portugal, Spain and Denmark, startups providing peer to peer or direct lending solutions are doing pretty well. Crowdfunding is also becoming a very popular funding source for many projects in Italy and Germany. Digital onboarding and full online business transactions are quickly becoming the norm for the users in quarantine all over Europe, showing the new paradigm to the traditional financial sector. In Scotland fintechs are making the most of Open Banking to help large organizations automate processes such as onboarding, AML/KYC and lending
Stephen Ingledew, CEO at FinTech Scotland said: “We’ve been very impressed by how fast the Scottish fintechs have reacted to the situation. The fintech movement is not just about helping the financial services sector, and many fintechs are helping businesses of all sizes and across all sectors with issues such as cash flow management, process automation and instant invoice payment for example. They all do their bit to keep the economy moving.”
Different measures, same objectives
Most governments in Europe were swift in their responses to support businesses amid Covid19 crisis. Employment being a priority, countries like Luxembourg, Spain, France, the Netherlands, Germany, the UK and Denmark have decided to pay between 40% and 84% of the salaries for the people forced to stay at home. For the moment, France and the Netherlands are the only countries providing direct funding aid to startups, with 80M€ and 250M€ dedicated to “bridge loans”, the other countries have decided to provide guaranteed loans and indirect funding schemes. Some countries have also imposed a moratorium on credits until September. All governments have postponed their tax payment deadline.
The actions undertaken by the various fintech accelerators and incubators have been varied but the goals have been the same: provide as much business continuity as possible to their companies, shift to online acceleration programs and keep the community moral high by providing online training and 24/7 calling support.
The impact on the European fintech ecosystem has been serious, without a doubt, but nothing compared to the dramatic impact on other industries like healthcare or public services.
“In Portugal we’ve seen that most of the support measures taken by the government weren’t a good fit for Startups, some of them don’t have the necessary traction or laying-off the employees is equal to losing the company’s most valuable asset: the talent. Taking action is a must and one of the initiatives that Portugal Fintech launched in this scenario was a “Fintech Solutions List”, a ready-to-implement list of 45+ products offered by fintechs for financial institutions; this created fast bridge between the startups and the incumbents, who are also facing a lot of challenges and are in need of fast and quality solutions. A win-win for both parties” explains Marco Nigris, Managing Director of The Fintech House.
Offering solutions, an entrepreneurial response
“Ask not what the country can do for you, ask what you can do for your country”, this has been especially true in the last months. All over Europe, fintechs are providing their technology and expertise for free or discounted prices, in order to support small businesses, financial institutions and the healthcare sector. Entrepreneurship is the best response to any crisis, and the startup members of the Talent Route are doing their best to find new solutions in order to build a better economy for tomorrow.
“In Denmark the crisis hit hard like everywhere! But in spite of the crisis, it is great to see that the fintech community has quickly come together to show how their solutions can offer a helping hand to the many SMEs now suffering. One great community initiative has been to develop a non-profit reward-based crowd platform where you can support your local merchant or café. More than 280 small business are using the platform after 10 days of operating.” mentioned Simon Schou, Chief Innovation Officer at Copenhagen Fintech.
Recommendations and next actions
In the coming weeks, the Talent Route members will launch various initiatives to facilitate collaboration between fintechs and large financial institutions in Europe. As well as a fully digital program, that will focus on increasing collaboration between European countries and help startups to passport their innovative solutions across the continent.
A short report providing recommendations for the European Commision, in order to support the fintech sector amid the COVID-19 crisis, will be published.
Last but not least, the Talent Route network is releasing their new website thetalentroute.com. The goal is to showcase the initiatives of the members, facilitate collaboration and to allow institutions and governments to monitor the evolution of the fintech sector in Europe.
About the Talent Route
The Talent Route is a consortium of the main accelerators and fintech incubators in Europe, with the aim to facilitate collaboration and increase innovation between European countries.
The members are: Innsomnia, Copenhagen Fintech, Holland Fintech, FinTech Scotland, Fintech District, the Luxembourg House of Financial Technologies, Startup Palace, Black FinTech, Hub 612, Frankfurt Accelerator, Startup Garage and Portugal Fintech.