During the last few years, the FinTech sector emerged as a leader in the digital disruption of the financial industry, observing a growing number of startups developing innovative solutions without bank licenses. Some countries like China, United States, UK, Japan and Germany have already established themselves as leaders in the FinTech industry, but other players are quickly catching up.
On the European landscape, investment in the industry totalled around $4.7 billion in 2017, and these figures are expected to continue raising. As a Spanish FinTech startup specialized in digital payment solutions for enterprises, we believe that it is important to understand the progress of Spain in the industry, and whether Spaniards are fast adopters of digital payments and other financial services.
According to a recent study conducted by Finnovista, approximately 117 new startups emerged in Spain in the last 15 months, particularly in the areas of insurance, crowdfunding, financial management, wealth management, corporate lending, and payments. This accounts for a net increase of over 41% in the past 15 months, positioning the country as the largest Ibero-American market.
In 2017, the Spanish ecosystem counted 294 startups in the industry; as a comparison, only 50 companies were developing technologically advanced financial solutions in 2013. These figures show that Spain experienced an impressive growth in the FinTech sector in the matter of 4 years – and this is just the beginning.
But this is not all. According to FinTech Global, Spanish companies raised over 120 million dollars in 2017 across 19 deals, a mind-blowing 10x increase in comparison to raised capital in 2016, which was only 12 million. This was driven by larger and later stage equity funding for companies in the sector.
On the other hand, the number of digital payment users in Spain has been steadily growing, increasing from 23 million users in 2015 to 27 million in 2018. In fact, this number is expected to grow to roughly 30 million in 2021 in the area of digital commerce.
According to the EY FinTech Adoption Index 2017, Spain positions above average regarding the percentage of FinTech users, obtaining the 6th position in a study that included the analysis of 20 markets overall. In fact, over 37% of the Internet users in Spain has used digitally enhanced financial services at least once, mainly for managing their finances, buying products online, or making transferences via their mobile apps.
And things are yet to get better for users: with the implementation of the new banking directive PSD2 by the European Commission in January, 2018, we are expecting to see faster, more convenient, and more innovative customer-centered services to meet the expectations of the users.
The Spanish market: degree of maturity and business model
According to recent studies focused on the Spanish financial technology market, the majority of the startups operate under a Business-to-Business model (over 52%), while 48% of them sell their services to the end consumer. Taking into account both B2B and B2C companies, 76% of them charge for their solutions, 21% provide services for free, and only 3% work with a freemium (mixed) model.
Regarding the maturity degree of the FinTech sector, a number that calls the attention is that only a very small percentage of the companies are close to completing 10 years on the market: in fact, barely 7% of them emerged between 2000 and 2005, when these services were still not that popular.
With these numbers in mind, it becomes clear that Spain is slowly, but steadily becoming a key player in the area of digitally enhanced financial services. Every year, the market is experiencing growth not only in terms of companies that develop FinTech solutions, but also in the number of users adopting new services to manage their finances. And yes, we might still be far from catching up with leaders like the United States and China, but the innovation potential of the Spanish startups in Europe is evident, and it is yet to grow.