Top 3 FinTech Hubs and companies in the European region

By Joy Dumasia

A FinTech hub is a focal point for FinTech activity within a region or a network. The eco-system encompasses the entire infrastructure, organisations and people within the hub and how those elements are organised and engage with each other. 

Just as organisations have distinctive traits that differentiate them from competitors and peers, FinTech hubs possess inherent attributes that make them unique based on their history and local intricacies. 

Startups need access to seed and scale capital to develop and grow their ideas and move to raise investment. Therefore, access to capital, whether from private investors, governments, or corporates, is crucial for FinTech activity across hubs. 

As Venture Capital (VC) investment deals are the best documented of these sources of capital, they are viewed by the industry as a credible barometer for the state of FinTech activity across hubs. Therefore, higher values and volumes of VC investment activity are a proxy for higher levels of FinTech activity.

From financial inclusion to wealth management and buy now, pay later, there are a handful of critical locations, in most cases cities, fostering the most significant innovations in FinTech. Almost invariably, these hubs succeed by combining tech-focused skill sets with an accommodating regulatory environment and inclusive cultural dynamic. Below are the largest FinTech in each hub and ranked them according to value:

• STOCKHOLM – Klarna valued at $31 bn

This Swedish FinTech hub produces some of the most highly valued startups globally, and its success is no secret. Attracting approximately 20% of all sector investment across Europe, the foundations for Stockholm’s achievements were laid by prescient digital adoption, big-picture strategic planning, and an inclusive cultural backdrop. 

The city is still home to several FinTech leaders – Klarna and iZettle – and other big names in techs such as Spotify and Skype. 

Now with over 400 startups residing in Stockholm and over $1bn in capital flooding the market, it’s a tech-friendly hub that fosters innovation and generates world-leading results.

Recently, IBS Intelligence reported that Klarna’s quarterly global Pulse reports underline consumers’ difficulty understanding the costs of using “traditional” payment methods, such as credit cards, and their overall shopping and money management behaviour.

• LONDON – checkout.com valued at $15 bn

London is one of the world’s largest financial services markets. With almost 1,000 startups reportedly taking up residence in the city and an estimated talent pool of 61,000, London’s reputation as a simultaneously established but up-and-coming fintech hub is well-founded. 

Since 2012 checkout.com has grown to be a team covering over 15 international offices, supporting thousands of businesses worldwide. They are proud to partner with everyone from startups to global superbrands, processing payments in over 150 currencies.

IBS Intelligence reported that Checkout.com, the cloud-based payments solutions provider, announced the acquisition of Estonian software development firm, Icefire. The addition of Icefire and its 110 technology engineers will join the company’s global technology teams to accelerate the delivery of critical products and features.

• BERLIN – N26 valued at $3.5 bn

Berlin generates the second-highest amount of FinTech investment in Europe per year, overtaken only by London. 

In fact, this German city might be poised to become London’s successor as the EU’s prime financial hub. A strong pool of skilled labour and leading challenger bank N26 is a testament to its technological development.

With other Big Tech firms (Facebook and Airbnb) also opting to open offices in Berlin, we may indeed be witnessing its growth into a FinTech hub of even greater renown. 

Recently, IBS Intelligence reported that N26 today announced the launch of N26 Insurance in a bid to offer its customer the option to purchase coverage, manage plans and initiate claims for a range of insurance within the app. The mobile bank has partnered with Simplesurance, enabling customers to select programs straight from the app, with the option to purchase an annual cover or monthly plans with a flexible cancellation policy. Prices start at €6 a month, based on the original value of their smartphone.

Policy and regulation are key factors that contribute to the success of a FinTech hub. Governments and regulators need to balance promoting innovation and effective competition while protecting investors and consumers. These bodies provide the framework, policies and procedures that both encourage and safeguard FinTech within the hub.

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