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1、State of EuropeanFinTech 2024UK Dominates,Midsized M&A Thrives,and Funding Crisis Spurs SustainabilityIntroductionWelcome to Finch Capitals 9th edition of the State of European FinTech report in which we further examine the growing influence of FinTech in Europe.As previously,we continue to focus on

2、 macro levers in FinTech in Europe including exit dynamics,valuation,funding growth as well what we believe our key trends for the next year.Our report is structured as follows:1.State of European FinTech,2.State of FinTech in Key European Countries and 3.8 Trends Shaping FinTechIt continues to be a

3、 challenging operating environment for all players in the ecosystem,although we are starting to see some green shoots.This was another year of contraction,but there is light at the end of the tunnel particularly in the exit market.It is crucial to be aligned with the potential buyer universe(strateg

4、ic or private equity)particularly in terms of valuation and structure as we come out of this reset.More emphasis is now placed on profitability than revenue growth with the European low to mid-market M&A ecosystem starting to thrive.While funding might seem to be dropping,it is a function of the har

5、d work companies went through last year in getting close to breakeven.Finch Capital partners with ambitious founders in financial and business technology verticals by backing teams to build and grow capital efficiently.We invest 5-15m in companies generating 2-15m in ARR.We help accelerate the path

6、to profitable scale by allowing founders and team to maintain control and provide liquidity for certain stakeholders as well.Weve invested in 50 companies including Fourthline,Goodlord,eFlow,ZOPA,AccountsIQ,NomuPay and Lavanda.Finch Capital consists of a team of 12 investment professionals with wide

7、 entrepreneurial experience located across offices in Amsterdam,London and Dublin.For more information see and subscribe to our newsletter.Eugnie Colonna dlstriaAAman GheiPJoe McHaleARadboud VlaarManaging PState of FinTech covers the 5 sectors of Financial Technology we focus onThis report covers th

8、e State of FinTechState of BusinessTech to be published later in 2024State of FinTechState of BusinessTechInsurancePaymentsBanking&Digital CurrencyWealth&Capital MarketsLending&Mortgages HR&PayrollTax&AccountingRegulatory&LegalBusiness Process AutomationOur portfolio Protection against various risks

9、 Claims and administration Fraud and payments Search and quoting software Data and underwriting B2B&A2A payments Payment value chain infrastructure(PSPs,gateways,pay-in,payout)Fraud and security Mobile payments/digital wallets/loyalty Card network infrastructure Banking as a service infrastructure(e

10、.g.card issuing)Open banking infrastructure Neobanks Digital currency and blockchain IFAs/Portfolio Management Software Investment Management Platforms Capital market tools Loan servicing and origination Lending technology B2C tech enabled brokers/lenders Communication and product construction tools

11、 Talent acquisition Resource management Payroll technologies Human capital management platforms Rewards&benefits management Performance management Compensation management Financial management software&FPA Tax prep,management and compliance AP/AR Revenue&spend management Shareholder/board planning Au

12、dit Treasury KYC/KYB/AML and other financial crime prevention Risk management(portfolio,vendor,GRC)Security and intelligence tools Legislation driven reporting and transaction software Contract and document management Software to simplify operations in a business including product management,BI and

13、other business improvement tools Supply chain management Customer relationship management Data integration across organization Executive Summary:UK Dominates,Midsized M&A Thrives,and Funding Crisis SpursSustainability2024 continued to been a turbulent year for European FinTech.Although funding conti

14、nued to decline,the sector is much more resilient with some green shoots on the horizon.European FinTech continued to have a thriving mid-market M&A almost the same size as the US,but as one of Europes largest sector,it needs to prove it can consistentlyexit unicorns.The UK dominates the European ec

15、osystem even more now,with 65%of the funding landing in the UK Please find some of the key observations:Funding dropped by 25%as fewer deals came to market and less funding is required post the focus on profitability;Higher interest rates resulted in record profits for Challenger Banks and attracted

16、 large rounds(Monzo,Revolut)which gave a boost to funding combined with the end of the crypto winter;Growth companies with higher EBITDA margins achieve higher revenue multiples(10 x+),More emphasis is now placed on EBITDA margin than revenue growth;Unicorn chasing is subdued,with a strong European

17、market for low to mid market M&A almost similar in size versus the US while large cap being 2-3x smaller;Battle is on with incumbents as they are hiring in tech much more aggressively than FinTechsUK Dominates,while Netherlands and Nordics remain resilient,and Governments are stepping up their role

18、to continue to provide funding to the ecosystemUK coming strong out of the turbulence,representing now 65%of volume Ireland,Germany,France and Spain have seen large govt initiatives to fuel growth in 2025Nordics and the Netherlands have been a resilient surprise with funding holding up,with more Lev

19、eraged Buyout investments showing more mature profitable companiesPoland needs more opportunities in Series A to B stages AI has taken the FinTech sector by storm,with several public announcements from insurers or BNPL players on the success they have had in implementing these solutions Outlook for

20、2025:Continued focus on profitability and consolidation and breakthrough for stablecoinsSustainable business models:This will continue to be the theme for the foreseeable future,and we expect investors to keep pushing for capital efficient growth Key areas we foresee strong momentum the next 6 to 12

21、 months are:Insurers going all in on AI Other consumer sectors learning from banking to become profitableStrategic payments M&A to counter PE payments M&AFundamental shift in wealth&asset management with market intelligence access keyRebound of BNPLCompliance driving decision making Seriousness of s

22、tablecoins offering for institutional investorsState ofEuropean FinTech01.Evolution of“Modern FinTech”from consumer to deep technology infrastructure FinTech is no longer consumer payments or money management.It is complex infrastructure that the world runs on.The next iteration will continue to be

23、more B2B focused first.Share of FundingFinTech 1.0 E-Banking E-Commerce E-Wallets30%B2B70%B2C45%B2B55%B2C60%B2B40%B2CFinTech 2.0 Money remittance Mobile payments Digital insurance Digital Lending FinTech 3.0 Payments rails Opening banking Digital currency infrastructure European FinTech went through

24、 a phase of scrutiny and emerging stronger now2.9BnDown-25%from 3.8Bn in H1 2023Capital invested in European FinTechs in H1 2024.443Down by-19%from 548 in H1 2023Number of fundraising deals in H1 2024.32%Up from 14%in 2021Share of 500m global M&A exit happening in Europe;Less deals but resilient mar

25、ket.-2813Decrease by-6%from 3100 in H1 2023Announced laid-off employees in European FinTechs in the last 12 months.Macro65%Up from 58%in H1 2023UK dominating share of capital raise.25.2%Up from 19.7%in H1 2023Flat and down rounds rise in H1 2024 as valuations have not picked up.9%Down from 15%in 202

26、2Share of top 15 M&A leaders in H1 2024;the exit market is diversifying.+1472Up by 10%in the last 12 monthsNumber of IT/Engineers hires in Top 10 European FinTechs despite layoffs.InsightsSources:Finch Capital Team analyses,Pitchbook,Sifted,Layoffs.fyi.LinkedInFunding:Banking takes the lead,Crypto b

27、attles for a breakthroughSource:Finch Capital Team analyses,PitchbookBanking is the most mature sub-sector,with a few emerging leaders attracting most of the funding available.While Wealth and Crypto are attracting a lot of attention and offering a variety of investment opportunities at the early st

28、age,there are not clear winners in sight yet.Lending and Mortgage are still to recover from the rise of interest rates.The top subsectors in#deals H1 20241.Crypto2.Wealth3.Payment4.Insurance5.Banking1.Banking2.Crypto3.Payment4.Insurance5.WealthTop subsectors in deal value H1 20240%10%20%30%40%50%60%

29、70%80%90%100%20192020202120222023H1 2024Deal Volume(in m)LendingCryptoMortgagePaymentInsuranceBankingWealthM&A:Top US acquirers are not running the show for European FinTech M&A anymoreTop 15 strategic acquirers of European FinTechs since 2019Source:Finch Capital Team analyses,PitchbookThe pool of s

30、trategic acquirers is diversifying01234Count of M&A deals20192020202120222023H1 2024500m+deals16%10%15%15%11%9%84%90%85%85%89%91%20192020202120222023H1 2024Count of M&A deals per acquirerTop 15 strategic acquirersAll othersProfitabilityis the main driver of valuation for public FinTech leadersSource

31、:Finch Capital Team analyses,Pitchbook0 x2x4x6x8x10 x12x14x16x18x20 x-100%-80%-60%-40%-20%0%20%40%60%80%100%EV/RevenueEBIDTA margin%0 x2x4x6x8x10 x12x14x16x18x20 x-100%-80%-60%-40%-20%0%20%40%60%80%100%EV/RevenueRevenue growth YoYThe highest-valued companies have+40%EBITDA margins and 10-40%year-on-

32、year revenue growthRevenue growth versus profitability as value drivers Q2 2024Moderate positive correlation r=0,4Neutral correlation r=-0,2*Methodology:We analyzed 10 companies from each of the following sub-sectors:Mortgage/Lending,Banking,Insurance,Payments,Wealth,and Crypto.For each company,we e

33、xamined two key components of the Rule of 40:revenue growth(%)and EBITDA margin(%)for Q2 2024 and produced these scatter plots to visualize the correlation between the two components and EV/Revenue multiples.The average FinTech is trading at 4.5x EV/Rev and 19.3x EV/EBITDASource:Finch Capital Team a

34、nalyses,PitchbookWhile the Rule of 40 tends to drive valuations in more established sectors like Banking and Payments,the volatile nature of Crypto doesnt adhere to this metric.*Methodology:We analysed 10 public companies from each of the following sub-sectors:Mortgage/Lending,Banking,Insurance,Paym

35、ents,Wealth,and CryptoEV/RevEV/EBITDARule of 40WealthBankingInsurancePaymentCryptoLending inc.MortgageQ2-24 median 4.5x 3.9x1.2x2.8x2.4x6.0 x8.6x1.9x6.3x3.5x2.9x6.3x6.4x3.2x5.8x2.2x2.4x5.9x7.5x41.9x3.4x26.0 x8.4x18.3x26.9x15.9x14.0 x42.6x12.7x19.5x23.6x27.3x6.2x13.4x20.5x18.0 x22.3xQ2-24 median 19.3

36、x 61%292%36%-13%40%44%0%-160%27%0%31%22%-9%182%31%18%29%45%Q2-24 median 30%Q2-22Q2-23Q2-24Source:Finch Capital Team analyses,PitchbookSlowing large-cap M&A activity heightens urgency for IPO market revivalEuropean FinTech ExitsThe IPO bottleneck needs to be reduced in the next 12 months500m+M&A deal

37、s are non-existent this year so far891841486100154130114445357654949242534621048827 0bn 5bn 10bn 15bn 20bn 25bn05010015020025030035020192020202120222023H1 2024Total deal count versus announced transaction valueIPOM&ALBO/BuyoutSecondaryH2 2024 predictionsTransaction value-announced30bn10bn8bn8bn4bn4b

38、n4bn4bnEstimated valuation at IPO13112112844716753145212597411211333230%20%40%60%80%100%20192020202120222023H1 2024Count of M&A deals per transaction size-announced10m10-50m50-100m100-300m300-500m500m+M&A:US is the preferred market for large exits,while Europe has a similar sized 500m marketSource:F

39、inch Capital Team analyses,Pitchbook50%65%71%63%45%73%88%46%30%21%24%36%27%13%4%4%7%12%18%0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024Asia11252Europe117610441United States121520265117AsiaEuropeUnitedStates46%42%49%49%44%40%35%27%36%34%36%29%31%32%26%22%17%14%27%29%32%0%10%20%30%40%5

40、0%60%70%80%90%100%2018201920202021202220232024Asia28201926312311Europe29333767342511United States493953915132127%28%65%Average2.3x500M+Exit Volume500mVC-backed Exits*Incumbents are hiring more engineers and developers than the biggest FinTech players Source:LinkedIn3551618680-34-1069-2IT department

41、3208182457-21-45-4917385Engineering207301242120-601691135552374IT department 741543971567-1686610246612276EngineeringTech Engineers/IT department employee#hires in the last 12 monthsDigital LeadersIncumbentsBankingPaymentLendingInsuranceWealthThe largest incumbents are investing in digitization and

42、in-house engineering,how will this impact the wider corporate FinTech ecosystem?State of FinTech in key European Countries02.The dominant role of the UK continues to grow and remains a global FinTech powerhouse Source:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsAs the U

43、Ks interest rate trajectory heads downwards and uncertainties surrounding impending elections are availed,we anticipate investment and M&A to grow into H2 2024 and 2025.A Labour government,the first since 2010,gives rise to questions and possibilities around public and private sector investor collab

44、oration as the new chancellor kicks off with the unveiling of a 7.3B National Wealth Fund.UK Private Capital industry shows resilience as Venture Capital and Buyout fundraising maintains consistency from 2023(73 funds)to YTD 2024(41 funds),though a return to the 2021 peak of 103 funds remains out of

45、 reach.Rising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 20240%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementEmbedded financing platformAirline disruption paymentsAI financial co-pi

46、lotBank engagement platformPrivate Equity software platform75443H123 FinTech funding2.02BH124 FinTech funding2.08B*Excludes Abound deal-13%Exit transaction volume H123 to H124580M Largest H124 deal*933M Abound deal 5%equity-10%Non-exit transaction volume H123 to H124+38%Median post-money valuation 2

47、023 to 20242024 Notable M&A+3%Resilient Dutch FinTech ecosystem driven by mix of PE and Venture investmentsSource:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsDutch fundraising undergoes a strategic correction in 2024,with average fund sizes shrinking,yet the market rema

48、ins resilient as the number of funds raised climbs from 12 to 13 year-to-date.Dutch venture capital gets a vital boost as Invest-NL and the European Investment Fund launch Dutch Future Fund II,injecting at least 200 million into VC funds to fuel growth.With a resilient VC funding environment ready t

49、o capitalize on the Netherlands FinTech leadership and global hubs like Amsterdam,Dutch FinTech investment is set to accelerate as we close 2024 and move into 2025.Rising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024Revenue financing platformPersonal fin

50、ance platformClimate investing platformSME pension platformCrypto derivatives exchange22111H123 FinTech funding152MH124 FinTech funding212M+200%Exit transaction volume H123 to H12492MLargest H124 deal-44%Non-exit transaction volume H123 to H124+109%Median post-money valuation 2023 to 20242024 Notabl

51、e M&A+39%0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementIrish FinTech is still finding its footing,but we expect a recovery in 2025 Source:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsIrish ventu

52、re and buyout capital in 2024 is on par with 2023,but average VC&PE fund sizes are shrinking fastdown 40%,from$179M to$107M,meaning capital is spread cross more fund managers.Irish FinTech fundraising is more robust than it appears at first glance.Major deals like Companjons 187.5M in 2023 and SoftC

53、os 100M in 2024 heavily influence the total capital raised,masking a solid underlying growth trend.We expect Irish FinTech investment to steadily grow in 2025,as confidence returns with rising deal volumes and standout companies from 2022 and 2023 seed rounds seeking Series A funding.Rising Stars in

54、 FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024AI-based mortgage platformSustainable InsurTech platformEmbedded insurance platformAI investing platformCashless tipping platform162211H123 FinTech funding212MH124 FinTech funding22M(Excl.SoftCo 100M M&A)+100%Exit tra

55、nsaction volume H123 to H12410MLargest H124 deal+0%Non-exit transaction volume H123 to H124+72%Median post-money valuation 2023 to 20242024 Notable M&A-100M-90%0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementStep up in SWF ca

56、pital is setting the stage for a promising few years Source:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsGermany heads into 2024 with a 43%increase in average venture and buyout fund sizes,rising from$216M to$310M.The country is on pace to match 2023s capital raised,but

57、its now concentrated among fewer fund managers.The German government is set to inject 1.75B into tech startups via the German Future Fund,aiming to attract an additional 1.75B in private capitalhoping to supercharge the startup and venture capital ecosystem for years to come.The German investment la

58、ndscape has shown resilience amid global economic headwinds,with sustained stability that is poised to strengthen further as investor confidence rebounds and government initiatives ignite future growth.Rising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024

59、Financial autonomy platformDigital insurance platformFinancial indexation platformEmbedded investment platformB2B Payments32222H123 FinTech funding527MH124 FinTech funding482M+0%Exit transaction volume H123 to H124151MLargest H124 deal-18%Non-exit transaction volume H123 to H124+17Median post-money

60、valuation 2023 to 2024-9%2024 Notable M&A0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementPoland has a promising early-stage ecosystem,but needs more growth deals Source:Finch Capital Team analyses,PitchbookGeneral highlights

61、FinTech highlightsDespite only Innova Capital raising a fund in 2024,it single-handedly boosted aggregate capital raised by 267%,from 120M in 2023 to 440M in 2024.Government backed PFR Ventures remains a prominent LP in Polish-focused VC funds,now with+3 PLN b AuM,60+portfolio funds and 650+indirect

62、 portfolio companies.A strong government-sponsored capital allocator within a talent-rich economy underscores a bullish future for Polish FinTechOver 80%of Polish FinTech deals in 2023-2024 were seed and early-stage rounds,setting the stage for a surge in Series A and B investments as we move into 2

63、025 and beyond.Rising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024Social payments platformEarned wage accessDigital asset trading platformBridge lending platformMobile payment platform11H123 FinTech funding52MH124 FinTech funding2M-100%Exit transaction

64、volume H123 to H1241.8MLargest H124 deal-78%Non-exit transaction volume H123 to H124-+72%Median post-money valuation 2023 to 2024-96%0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementFrance under pressure to diversify outside A

65、I as funding and volume fallSource:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsFrances average fund size skyrocketed 74%,jumping from$587M to$1.03B.While total capital raised is set to just miss 2023 levels,it has already surpassed 2022,with fewer managers controlling t

66、he funds.Frances 2023 FinTech figures may be skewed by Ledgers massive 460M raise but stripping that out reveals a 36%funding surgeclear evidence of the tech markets undeniable strength and resilience.Frances FinTech sector has thrived under pressure,and with AI technologies advancing at lightning s

67、peed,2025 is set to unleash a wave of innovative new players ready to disruptRising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024Insurance intelligence platformMoney transfer softwareEmbedded insurance platformOnline payment platformWeb3 wallet platform2

68、2222H123 FinTech funding717MH124 FinTech funding196M+100%Exit transaction volume H123 to H12446MLargest H124 deal-49%Non-exit transaction volume H123 to H124+7%Median post-money valuation 2023 to 2024-73%2024 Notable M&A0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurT

69、echLendingMortgagePaymentsWealth ManagementGrowing Funds and 20B Government Initiative Set the Stage for Tech Growth into 2025 Source:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsIn YTD 2024,Spains Venture and Buyout fund managers have surpassed 2023s capital,raising$840

70、Ma 17%jump from last years 720M.With average fund sizes skyrocketing 57%,from 60M to 140M,this capital is now concentrated among fewer managers.The Spanish government is launching the Spanish Society for Technological Transformation(SETT),a 20 billion state-owned investment company aimed at attracti

71、ng private investment and expertise into key sectors like semiconductors,capitalizing on the AI surge.With Spains private capital sector thriving and government initiatives supporting investment in new technologies,the country is well-positioned for steady growth in its tech industry as we approach

72、2025.Rising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024Portfolio management platformForex hedging platformAI-based stock intelligenceBlockchain-enabled softwareProduct trade-in platform22221H123 FinTech funding146MH124 FinTech funding42M-80%Exit transa

73、ction volume H123 to H12415MLargest H124 deal-38%Non-exit transaction volume H123 to H124-35%Median post-money valuation 2023 to 2024-71%2024 Notable M&A-40M0%10%20%30%40%50%60%70%80%90%100%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementStability is the the

74、me in the Nordics,but there is a shift towards larger dealsSource:Finch Capital Team analyses,PitchbookGeneral highlights FinTech highlightsNordic venture and buyout fundraising is on fire,with a staggering$38B raised YTD 2024a 352%surge from 2023s$8.4Bfuelled by EQTs colossal 22B mega fund.The Nord

75、ic FinTech sector is flexing its muscles,with both fundraising and transaction values soaring,even as deal volume dipssignalling a shift towards bigger,more mature investments.With a robust private capital pipeline and a dynamic FinTech investment landscape,the Nordics are primed to supercharge thei

76、r early-stage startups,propelling them through growth phases and into market leadership over the coming years.Rising Stars in FinTechCapital Invested in FinTech(%of)Most Active FinTech Investors#Deals in 2024Online payment applicationWealth management softwareSustainability-led crowdfundingPersonal

77、financing platformRetail and payments platform22111H123 FinTech funding208MH124 FinTech funding210M-71%Exit transaction volume H123 to H12445MLargest H124 deal-27%Non-exit transaction volume H123 to H124-1%Median post-money valuation 2023 to 2024+1%2024 Notable M&A-391M0%10%20%30%40%50%60%70%80%90%1

78、00%2018201920202021202220232024BankingCryptoInsurTechLendingMortgagePaymentsWealth ManagementOpportunities Likely to EmergeIn Current Situation03.8 themes shaping FinTechInsurancePaymentsWealth and Capital MarketsBanking and Digital Currency Lending1Insurance gets an AI Upgrade:4 in 5 actuaries now

79、use AI to slash risk and boost accuracy2Private equity is eating payments,the strategics need to act now or be eaten up3B2B payment infrastructure needs to see flexible payment terms if they want to survive 4Neobanks are back with a bang!5Stablecoin can propel to crush traditional banking 6Cost cutt

80、ing revolution in wealth advisory underway7The trading desk is overhauled with advanced data 8BNPL has beaten skeptics and is making a comeback Insurance gets an AI upgrade:4 in 5 actuaries now use AI to slash risk and boost accuracySource:Hyperexpotential,Finch Analysis 1The role of an actuary in u

81、nder threat from AIAnalysingDataDeveloping ModelsSetting PricingMonitoring Performance Communicating Results Key Takeaway:It is clear that building new pricing models take up nearly 3x more time than any other function and this is the reason it will be first to be disrupted by AI but the future is c

82、ollaborative.Actuaries themselves will use NO CODE tools to train AIActuarial shortage will continue demand to increase by 24%Key skills shift from mathematical to communication Private equity is eating payments,the strategics need to act now or be eaten upSource:S&P Global,Nomupay,Finch Analysis.St

83、ripe revenue breakdown is a Finch estimate2Last 2 years have seen best M&A environment with PEsMost strategics have concentration in local geos and have lots of cash What can they buy?Global PE/VC-backed investments in payments industry,2019-2024($B)*Denotes amount of cash and equivalents on balance

84、 sheetNorthAmericaRestNorthAmericaRestLatinAmericaAfrica andAsiaNorthAmericaRestNorthAmericaRest$9 BEst.$1-3 B$14 B$6 B$1.2 B600mEMEANorth AmericaAPAC1.Market share in Asia2.Ancillary products B2B payment infrastructure needs to see flexible payment terms if they want to survive Source:PYMTS3Despite

85、 the advent of virtual cards,CFOs continue to use ACH and the story is similar in EuropeThe future of B2B payments 83%of B2B buyers abandon an e-commerce purchase if no payment terms are offered Nearly 30%of B2B customers are slowing down payments to their customers Need to be viewed as part of a br

86、oader AP/AR process for business,not in isolation Virtual cards have technical ability to add this functionality quicker than networks,but it is expensiveKey Takeaway:Instant payments only makes sense if an intermediary can provide payment terms.If low cost networks(ACH,SEPA,BACS)can add this flexib

87、ility,adoption will skyrocket.Neobanks are back with a bang!Source:Finch Capital Analysis4Challenger banks are proving that they can rightly challenge incumbents now that interest rates increasedWhy are they making money now?Interest rates have increased.Those with a deposit capability have seen Net

88、 Interest Margins have increase Neobanks were one of the first to cut costs in 2021/2022 as interest rates plummeted Cards/Interchange growth is contributing to the growth They have diversified their revenue streams particularly ones with multiple products(subscription,trading,fx)Key Takeaway:With i

89、nterest rates likely to fall in the next 2-3 years,it will be critical to see how the“neo banks”adapt to a more stable interest rate environment.2022 revenues2022profit2023 revenues2023profit923-251,800438151-2522616356-1168801545319668230176-610012223-180254-856948817Note:In some cases where FY 202

90、4 closes in H1 2024,considered 2023 results.Pre-tax profits also considered to be profits for some banks that have loss carry forwards Stablecoin can propel to crush traditional banking Source:Nick Carter Castle Island Ventures,The Block Data.5The incumbents are serious about stablecoin Incumbents a

91、re threatened by Stablecoins and as a results banks with their own programs hold an advantage particularly with the regulatory Questions will start to arise about Tether and Circles reserve management policies If existing payment companies leverage stablecoin to increase its Total Payment Volume,tha

92、t could potentially be game changing for issuersKey Takeaway:Stablecoins can be a true competitor to a card network and banks will do what they can do avoid that.The biggest hurdle remains KYC,something the regulators will insist on from these networksThe use and supply of Stablecoin has been higher

93、 than ever Cost cutting revolution in wealth advisory underwaySource:FNZ6The incumbents are serious about stablecoin Key Takeaway:Importance of engagement with clients will result in front office enhancements,but middle office and operations will see cost disruptions.Mid Office and Operations are li

94、kely to see continued cost reductions via outsourcing to third partiesThe trading desk is overhauled with advanced data Source:Refinitive,S&P Global7 Dilemma:Generic vs.Customisation with the winner offer customisation tools on top of generic market data Client workflow automation as move away from

95、desktop-based solutions Relationship between data vendors and application providers is tense with price increases on the wayKey Takeaway:More emphasis will be placed on data analytics not only at trading desks,but at business level for compliance and performance reasons.Growing demand for intelligen

96、t data in capital markets$4B$70BTotal TAM for market intelligence Largest vendor revenueBNPL has beaten skeptics and is making a comeback Source:Atradius Payment Practices Barometer,Affirm.8Regulators are happy that firms are spending more time on risk assessment Key Takeaway:Profitability is improv

97、ing among all BNPL players with AI driven risk assessment a leading indicator for better lending standards BNPL is NO longer about e-commerce Summary04.The year of reckoning has arrived in European FinTech.The Return of Funding discipline resulted in a Flight to Quality and Profitability to Survive

98、for the entire ecosystem.Funding dropped by 70%to pre 2020 levels driven by the end of mega round and flight to quality;A retreat in Payments and Challenger Banks as the traditional resilient sector loses its crown to Crypto and Lending given valuation benchmarks achieved in 2022;US,Asian and Strate

99、gic investors are retrenching and are in 50-100%less deals than they were last year;M&A has remained stable with volumes on track to match 2022 levels,but deal sizes have fallen dramatically with 19%of deals above 500m vs 30%last year;Valuations are stabilizing in the public markets which will help

100、private companies to get funding/exits,but at different terms than before,which will take time before all companies reset last round to current valuationsEuropean local ecosystems have been impacted differently based on their maturity US investors were ranking in the top lists in major countries in

101、2021/H1 2022,but have disappeared this year UK,Germany and France saw a 70%drop in funding value BUT exits were getting done consistently Ireland and Netherlands are more elastic to single deals(Fourthline&NomuPay respectively)in both regions Poland recorded biggest drop,but the crypto infrastructur

102、e sector is gaining momentum The trend of a shift to software and B2B FinTech continues in 2023.More than 50%of all FinTech deals are B2B software versus 17%in 2016.Business models:Some balance sheet business are in tough spot with loan losses rising as well as those without own deposit funding.Focu

103、s on recurring software businesses with strong margins and NRR vs.product led hyper growth.Key areas we foresee strong momentum the next 6 to 12 months are:Revisit of the payment investment landscape,with accelerated consolidation expected to boost profitability and growth RegTech continues to show

104、attractive growth in KYC and AML Consolidation of Open Banking and Banking as a Service continues Generative Artificial Intelligence will get at scale in Insurance and Banking Automation and Digitalization of the CFO and HR function continues to increase control and efficiencySummaryContact detailsEugnie Colonna dlstriaAAman GheiPJoe McHaleARadboud VlaarManaging P