As the pandemic has heightened the importance of fintech, Lili Metodieva, MD at Monneo, writes on the challenges that the sector faces in Europe.  

Fintech has elbowed its way to the forefront of modern finance, and its growth shows no sign of slowing.

By the end of the first half of 2021, there were already 24% more Fintech start-ups than in the whole of 2020, and the industry is growing at a compound annual rate of 23% over the forecast period 2021-2026. By 2026, the global Fintech sector is expected to be worth $324 billion.

Despite this startling pace of growth, the European Fintech market has not been immune to the challenges presented by COVID-19 and Brexit. 

COVID-19 removed the human touch

A significant part of Fintech’s appeal from a consumer perspective is the technology’s ability to simplify the complex and accelerate the arduous. This includes removing the need to physically talk to third parties when carrying out essential financial tasks, instead letting the software take over. 

However, where the need for excessive human interaction is negated, face-to-face dialogue takes on added importance in a marketing context. The likes of trade shows and conferences provide those rare opportunities for clients to meet the experts behind the brand and develop those bonds of trust that can’t be replicated to the same extent over email, or even video chat. 

Consolation can though be derived from the fact that this was at least the same situation for everyone and some return to normality is very much – we hope – on the horizon.

The Brexit question

Businesses across all sectors are often restrained when it comes to discussing the effects of Brexit on commerce for fear of inadvertently poking that particular hornets’ nest. It is a reluctance that must be overcome because there have been issues and they do need to be properly addressed.

For example, from 1 January 2021, UK Fintech firms were no longer passported, meaning that actively marketing or advertising in the EU is no longer permissible. Nevertheless, there exists no restrictions under UK and EU regulations or PSD2 which prevents UK payment institutions from providing services to EU clients if those clients seek these services.

Then there is the international bank account number (IBAN) problem. Even though the UK is no longer part of the EU, it is still part of the Single Euro Payments Area (SEPA). Refusing to accept a payment from the IBAN code of a SEPA member is a violation of EU rules and yet, EU-based payment service providers and acquirers are becoming more reluctant to settle using UK bank accounts or IBANs, over concerns around regulatory complexity and increased administrative loads.

Greater diversity is leading the charge to a brighter future

Though it can be tempting to catastrophise when large obstacles break through the path to success, it’s important to remember that the challenges presented by COVID-19 are starting to recede and those presented by Brexit, with some greater industry collaboration, are not insurmountable. 

There’s also another reason that Fintech has cause to be quietly confident – it is emerging as a sector within which women can make, and are making, a real impact. 

Financial services have always been perceived as being a male-dominated sector but within Fintech, women are more visible than they have ever been. Today, almost 30% of the UK Fintech workforce is female. Of course, the objective must be to achieving a 50/50 gender split, but initiatives are underway to meeting this objective. 

This is crucial for women interested in joining the sector to understand. Women are under-represented in Fintech, to claim otherwise would be to contradict factual evidence, but this is not because Fintech is a hostile environment for them to work in.

A major cause for the continued dominance of men in Fintech is the lack of job applications from women. This can be partly traced to the fact that there are fewer females with the STEM qualifications (only 13% of candidates taking these studies are female) that Fintech requires. This strikes more as a marketing issue than evidence of discrimination against women and it is incumbent on course providers to do more to ensure higher intakes of female students.

That is not to absolve Fintech companies of responsibility, but there is evidence more is being done by them too. Some firms have taken to doubling finder’s fees for employees that recommend a successful female job candidate, while others are reviewing job descriptions to ensure the language appeals to female applicants.

Such initiatives, coupled with improving networking access and visibility of female professionals will lead to change. That change may be gradual – a bit too gradual for some – but it will happen. The key takeaway for any woman considering a career in Fintech is to go for it. Yes, there’s work to be done on forging greater equality but as with COVID-19 and Brexit, work is underway and solutions exist. The point is, the sector wants you and you will find yourself both welcomed and valued – as I have myself.