November: Fintech News Update

Finance Tips

As winter approaches, fintechs in Europe and worldwide are already feeling the chill of the increasingly cold, dark days ahead. FTX’s implosion has left a sour taste in the mouths of crypto investors.

But while fintech is facing some significant challenges, there are still plenty of reasons to be optimistic, especially in Estonia. Read more:

Estonia ranked 6th  among European fintechs, with the UK and Sweden taking the top two spots.
Estonia ranked 6th among European fintechs, with the UK and Sweden taking the top two spots.

Estonia ranks in the top third of European fintechs by performance

A 2022 report on Europe’s fintech opportunity published by McKinsey revealed that the United Kingdom and Sweden lead European fintechs in both growth and performance. The report examined fintechs founded per capita, fintech funding per capita, deals, unicorns, and fintech jobs relative to the total workforce.

Estonia scored in the top third in every category besides unicorns, finishing with an overall rank of six behind the UK, Sweden, Malta, Luxembourg, and Switzerland. Estonia finished second in the number of fintechs founded per capita and came first in the number of deals per capita.

FTX collapse rocks the crypto industry, costing investors billions

FTX, the Bahamas-based cryptocurrency exchange, stole November’s news headlines after its shocking collapse rocked the crypto world, costing investors billions of dollars.

As of mid-November, $1 billion–$2 billion of client funds are missing, with authorities in both the US and the Bahamas investigating the incident. There is also speculation of possible insider trading and other illegal activity between FTX and Alameda Research. This quantitative trading firm filed for Chapter 11 bankruptcy protections when FTX declared bankruptcy.

In response to the $32 billion crypto exchange’s fall, Bitcoin, Ethereum, and other cryptocurrencies suffered deep losses. Lawmakers are now facing pressure from politicians and others to tighten restrictions and roll out more comprehensive regulations on cryptocurrencies and crypto exchanges.

Fintech fall continues, but European buyers still love BNPL

Despite its struggles earlier in 2022, BNPL appears poised to continue growing quickly.
Despite its struggles earlier in 2022, BNPL appears poised to continue growing quickly.

2022 has left fintech funding in the cold, with investors exercising caution and retreating from the funding frenzy of 2021. Through Q1 and Q2 of 2022, fintech funding values declined nearly 25% compared to the same period in 2021.

Despite the overall slowdown in 2022, fintech’s long-term prospects seem fine. Fintechs’ growth continues to outpace traditional banks, with insurtech and digital payments sitting in a particularly favorable position, ready to weather the storm.

Meanwhile, buy now, pay later (BNPL) continues to be the darling of Europeans despite its struggles earlier in the year. BNPL is expected to grow at 23.9% between 2022–2028 as firms gear up to expand into new territories, forge new partnerships, and diversify their offerings.

Peer-to-peer lending gains traction as European governments get on board

P2P lending is gaining traction, with growth forecasts of nearly 30% annually through 2031.
P2P lending is gaining traction, with growth forecasts of nearly 30% annually through 2031.

Peer-to-peer lending is quietly on the rise, particularly in nations like the UK and France, where the government is working to support the industry’s long-term existence. Forecasts from Transparency Market Research (TMR) showed enormous potential within the P2P lending space, estimating compound annual growth rates of 29.3% from 2022–2031, along with an industry-wide valuation estimate of $1.14 trillion.