Vivian Hendrikse
Financial Technology, known as ‘FinTech’, is the term used to describe financial services by the means of software and modern technology. Even though the term FinTech has raised global awareness only in recent years, FinTech initiatives arose many years before it had been created. One of the first financial technologies, for example, is one we otherwise know very well as the ATM machine. The fact that we only now know and use the word FinTech to describe modern, ATM-like innovations is caused by a large movement in the past decade that includes the development of an extremely high number of FinTech initiatives worldwide. Think of payments via your smartphone, or generally transferring money online; it is all possible because financial technology. Think of cryptocurrencies and the Blockchain; all included in FinTech. It is therefore not surprising that banks and other large financial institutions depend on FinTech initiatives and cooperate with them in order to improve their financial services. Many of these organizations provide incubator programs or startup boost-camps to help FinTech companies grow.
When investing in the FinTech sector, it is thus of importance to recognize the FinTech landscape in the country of interest. Spain has seen a tremendous rise in the number of FinTechs in the past years. Early 2013, merely 50 FinTech startups were located in Spain. Within five years, this number has grown to over 300 FinTech firms registered in Spain, creating a market in which Spanish FinTechs raised over 120 million dollars across 19 deals in 2017, an impressive 10x increase in comparison to raised capital in the year before (12 million in 2016), see graph below.
FinTech investment in Spain (USD, number of deals). 2014-2017
Source: FinTech Global
When taking a closer look at the kind of FinTech initiatives that exist in Spain, the ‘FinTech News’ provided an overview of the segments that concentrate most activity, innovation and dynamism in Spain in the field of FinTech. The division is as follows: Payments & Remittances is the largest FinTech segment (24%), followed by Lending (19%), after which Enterprise Financial Management (11%), Crowdfunding (10%), Personal Finance Management (10%) and Insurance (8%) complete the overview.
Next to FinTech initiatives, Spain is one of the leading countries when it comes to FinTech usage, according to the EY FinTech Adoption Index of 2017. Over 37% of the internet users in Spain has used financial technology services at least once – mainly for managing their finances, purchasing products online, or making transfers via mobile apps. What is more, as this development has grown every year and the largest user-group consists of millennials, the usage of FinTech in Spain is only expected to further increase.
Since more than 90% of the FinTech initiatives in Spain are brought to the market by startups, it is of interest to assess the startup environment when considering investing. Several organizations have been created to connect FinTechs in Spain in order to provide transfer of knowledge and know-how. These include FinTech Spain and the Spain FinTech Hub. Furthermore, both organizations connect FinTechs to many accelerators and incubator programs, both in Spain and in Europe, which all in all provides for plenty of options for Spanish FinTechs to grow and excel.
All in all, the FinTech ecosystem in Spain thus fosters many opportunities and an interesting future perspective.
About the author:
Vivian has completed both her bachelor’s degree in International Business Administration and her master’s degree in Finance and Investments at the Rotterdam School of Management. While obtaining experience in investment banking and FinTech, she developed a strong interest in innovations in the financial world and sustainability. With her international work experiences, Vivian is able to recognize trends in Europe and Asia in both sectors and translate these into progressive business strategies.
Sources:
Ani Miteva (2018, March 22) The Spanish FinTech landscape in 2018. Available online (link) [Last access: 28.07.2018]
Ernst & Young (2018) EY FinTech Adoption Index 2017. Available online (link) [Last access: 28.07.2018]
FinTech Global (2018, January 23) Investment in Spanish FinTech companies surged in 2017, despite a slowdown in deal activity. Available online (link) [Last access: 28.07.2018]
FinTech News (2017, February 19) Fintech Radar Spain: Spain quadruples its Fintech sector in three years. Available online (link) [Last access: 28.07.2018]