The global fintech landscape has encountered accelerated change in recent years thanks to expansive funding and the notably pivotal role the industry played in adapting to the pandemic and post-pandemic eras. Financial accessibility and digital services rapidly expanded around the world, giving businesses and consumers never before seen access to banking and financial convenience.
Geographically central and amassing some of the wealthiest consumers on the continent, Germany, Austria, and Switzerland are among the leading economic contributors in the region. And the ingredients for innovation have been ripe. DACH is home to an advanced infrastructure and some of Europe’s most highly skilled tech experts. Accounting for just 13% of Europe’s population, Germany, Austria and Switzerland are home to a fifth of its developers. Established finance and banking industries have also provided a leg up with greater capital, large client reach and unique problems to solve.
North America and Asia have historically been rich breeding grounds for fintech growth and VC investments. And within Europe, the UK unsurprisingly continued to attract the most investment as the region’s leading financial hub. Yet fintech’s rising tide has impacted every corner of the continent. Over the past half decade, DACH has attracted progressively more of the global funding pie, emerging as a genuine rival to the original fintech centres.
The coming years, however, may be a time of uncertainty amid inflation and market volatility. Despite recent success, economic, societal and geopolitical shifts are making it harder for fintechs to find their way forward. Particularly as the focus has shifted from pandemic-era enthusiasm for the digital economy to driving high growth and scalability for businesses.
DACH fintechs offer a way forward for the continent. By bringing diverse technical talent together with an established finance industry, businesses and consumers in the region are embracing financial innovation unlike ever before.
The full report dives into six key factors driving this success:
Set up for success: DACH nations boast exceptional technical infrastructure and human capital. From plentiful software developers to the highest level of patent applications in Europe, Germany, Switzerland and Austria have all the ingredients for a thriving fintech industry.
Cultural revolution: A region known for financial conservatism has transformed in recent years, to become a fintech pioneer in several areas. DACH populations have embraced digital payments and cryptocurrency trading apps, as old certainties about financial stability have been eroded by rising asset prices and low returns on deposits.
Deep and diverse: DACH’s fintech ecosystem is geographically more diverse than any other in Western Europe, with no city accounting for a majority of the region’s fintechs. This allows pockets of sector specific innovation to thrive from the Crypto Valley in the Swiss canton of Zug to Banking-as-a-Service (BaaS) startups in Berlin and asset management products in Frankfurt.
Continental powerhouse: After the UK, Germany and Switzerland are the primary destinations for fintech investment in Europe, leaving France in their wake. 2021saw mega funding rounds for fintechs in sectors as diverse as insurtech, BaaS and investing, as major US venture capital funds entered DACH with a vengeance.
Emerging uncertainty: From inflation to rising interest rates and geopolitical uncertainty, fintechs globally are entering a new period of uncertainty. A playbook is emerging in DACH, which involves doubling down on core markets and monetising existing customers, rather than focusing only on growing the customer base.
Partnerships and technical agility will be key to navigating this world of change: the companies that succeed will be those that build alliances with other fintechs in order to distribute their products to clients and consumers, and increase sales by offering products in concert with other fintechs.
Read on for a look at the new normal for fintech in DACH and across the globe, where uncertainty is the new norm and businesses will work to tackle key challenges to deliver success. How can fintechs equip themselves for an environment of constant change?