Recent Trends in the FinTech Space

Samarth Shekhar, Regional Manager EMEA, SixThirty Global FinTech Fund

Samarth Shekhar, Regional Manager EMEA, SixThirty Global FinTech Fund

Having started his career with an MBA from the Indian Institute of Management Calcutta, Samarth Shekhar gained hands-on experience in the field of FinTech in Europe, and today heads the EMEA presence of SixThirty Ventures, a venture fund focused on early stage FinTech, InsurTech, Digital Health & Cybersecurity startups. He also co-founded FinTech Forum (Frankfurt, 2013) - an award-winning initiative focused on European FinTech startups and investment trends. He was recognised by the WSJ / Financial News FinTech40 as one of the “40 Innovators Shaping the Future of Finance” in 2014.

1. Tell us a bit about yourself.

I head the Europe/ MEA presence of SixThirty Ventures, a St. Louis, US-based Venture Capital fund focused on early-stage FinTech startups. I am also the co-founder of FinTech Forum (2013, Frankfurt), a network of 12000+offering insights and connections into the European FinTech startup and investment landscape. Prior to this, I spent several years in sales and business development roles at the intersection of finance and technology, mainly in Europe.

2. How would you define FinTech?

From an investor’s perspective, we see FinTech broadly as (relatively) young firms using technology to offer financial services directly (disruptors) or to enable companies who offer financial services (enablers).

The way the word FinTech started to get (over-) used in the last few years is definitely a result of the global financial crisis, which made it hard for individuals and SMEs to access credit, but also resulting in massive lay-offs. This talent pool saw the opportunity in reinventing lending – to start with – and then moved on to areas like crowd-funding, wealth management (“robo advice”), SME banking etc.

3. What are the key trends you see in the FinTech space?

Firstly - as every publication and event will tell you - FinTech continues to be a “hot” space, with nearly USD 40bn invested in FinTech startups in 2018 alone according to data provider CB Insights. In Europe, nearly 20 per cent of VC funding is flowing into FinTech startups for the last few years.

I would say there are three broad trends that developed over the last few years I have been watching the space:

- The initial euphoria of FinTechs replacing banks went away by 2015-16 as it became clear that customer acquisition for offering financial services is not the same as that for other free (or freemium) consumer apps.

- However, before financial institutions could become complacent, FinTechs showed that the bigger threat is how consumer-friendly financial services could be easily embedded into other sectors’ workflows, e.g. retail, telecom, travel etc.

- A handful of “challenger banks” have shown that pure B2C models can scale, but it is still early days.

- Finally, greenfield markets like China and South-East Asia have built massive mobile-first, machine-learning driven giants that are the exact opposite of long-standing banks with creaking legacy architectures.

4. Where do you see the market going in the next few years?

I expect evolution rather than revolution here. I think the future will belong to a mixture of:

- incumbents(banks, insurers etc.) who practice “smart self-cannibalization” (i.e. decide proactively which businesses to focus on and compete in, which ones to partner with, and which ones to shut down), and

- Asian or American BigTech (Google, Amazon, Facebook, Apple..) giants with “robo-banks.”