Sixteen Fintechs hubs from the Talent Route, federating more than 3,000 Fintechs in Europe, have decided to intensify their collaboration, to assess and counter the impact of the COVID-19 pandemic on the European Fintech Industry, to share best practices, define best actions and mutually support the ecosystem.

The 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 Fintech are at a standstill.

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 represents hundreds of businesses and thousands of jobs.

Some Fintech 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 organisations 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 Fintech have reacted to the situation. The Fintech movement is not just about helping the financial services sector, and many Fintech 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 COVID-19 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 startu-ps, with €80m and €250m dedicated to "bridging 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 morale 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 Start-ups, 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 Fintech for financial institutions; this created fast bridge between the start-ups and the incumbents, who are also facing a lot of challenges and require fast and quality solutions. A win-win for both parties” explained Marco Nigris, Managing Director of The Fintech House Portugal.

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, Fintech are providing their technology and expertise for free or discounted prices, to support small businesses, financial institutions, and the healthcare sector. Entrepreneurship is the best response to any crisis, and the start-up members of the Talent Route are doing their best to find new solutions to build a better economy for tomorrow.

In Denmark, the crisis hit hard like everywhere! However, despite 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 businesses 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 Fintech and large financial institutions in Europe, and help start-ups to passport their innovative solutions across the continent. A short report providing recommendations, to support the Fintech sector amid the COVID-19 crisis at the European level, will be published. 

Finally yet importantly, the Talent Route network released its new website

The goal is to highlight the initiatives of the members, facilitate collaboration, and to allow institutions and governments to monitor the evolution of the Fintech sector in Europe.

Our main objective when we start with a client is to bring them the best innovative solutions worldwide. For us, the Talent Route is a fundamental hub to connect with the best talented startups, but also our main network to update our trends map and to share challenges with companies and government all around the world” stated Francisco Estevan, CEO of Innsomnia.

The Talent Route is the most ambitious European initiative in the Fintech field. The main Fintech hubs in Europe have decided to work together in order to grow the EU Fintech Ecosystem but also to support the local startups to launch their businesses all over the European Union. We are developing the Financial Industry of tomorrow, together” stated Alex Panican, Head of Partnerships and Ecosystem at the LHoFT in Luxembourg.

The Talent Route is a consortium of the main accelerators and Fintech incubators in Europe, to facilitate collaboration and increase innovation between European countries.