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Fintech Startups: Shaping the Payments Industry

14 May 2021 updated
11 min

Fintech is transforming the way financial businesses operate, the way they cooperate and negotiate with their clients, regulators, and other industry players. 

Almost all types of businesses use fintech and defi development services, from start-ups and growth companies to established and reputable mastodons. In recent years, many new directions have appeared in fintech that rely on advanced technologies created specifically for certain sectors or functions in the financial ecosystem. 

fintech predictions 2021

Such areas, for example, include RegTech (technologies that help companies to comply with regulatory authorities) and InsurTech (insurance technology). 

Despite continuous technological innovation, traditional banks still retain a dominant role in the financial ecosystem. Today, there are still thousands of banks and lending institutions with physical branches around the world that do not yet feel strong competition from new fintech companies that target mainly the younger generation.

What is the fintech industry in the modern world?

Financial technology – or fintech for short – is a capacious term for companies that bring modern technology to the financial world. According to various estimates, there are already about 10,000 fintech startups in the world, and their number is constantly growing.

From 2010 to 2015, the volume of venture capital investments in fintech has grown tenfold, to almost $ 20 billion a year, and there are already several dozen startups in this area, whose estimate has exceeded a billion dollars. Despite all this, the penetration of new digital business models in the financial sector in the United States is less than 1%. So what is the fintech industry and where does investor money go? 

fintech sectors

Payments and transfers

This segment unites wallets, money transfer services, gateways for accepting online payments, etc. It accounts for up to a third of all investments in fintech startups, and the largest national fintech companies were created specifically in the field of payments (Russia with Qiwi is no exception). At the same time, the margin in this segment is low (rarely more than 2-3%) and you can only make money on a large scale. This is why major payment companies – Paypal and Alipay, with nearly $100 billion in transactions per month – have grown thanks to close relationships with the world’s largest marketplaces eBay and Alibaba.

Another fast-growing subcategory of this segment is remittances. Investors are attracted by the scale of this market (more than $500 billion a year) and the presence of huge inefficiencies in it (such as the fact that the cost of international transfers in some cases reaches 10% or more).

Companies in the fintech segment


Country: Great Britain 

Investment: $580 billion. Valuation: $10 milliards. 

British neobank Revolut is one of the leading fintech companies among those focusing on service security. It allows users to enable or disable contactless payment, gesture and online payments, and ATM cash withdrawals at will. 

Ant Financial 

Country: China 

Investment: $4.5 billion. Valuation: $60 billion. 

The largest fintech company in the world (and the second most privately-owned technology company after Uber). In addition to payments (Alipay brand) works in all key fintech verticals. 


Country: USA 

Investment: $194 Million. 

Valuation: $50 billion. 

The main payment service in Western countries. In 2015, it separated from eBay and is now rapidly expanding into adjacent fintech verticals. 


Country: USA 

Investment: $300 Million. 

Valuation: $5 billion. 

The world’s largest B2B fintech startup helping businesses accept online payments in all major currencies. 


Country: UK 

Investment: $90 Million. Evaluation: $1 billion. 

One of the most famous fintech startups in Europe. Reduces the cost of transfers by using the P2P model (the system connects users who change different currency pairs). The turnover is almost $1 billion per month.

European fintech in Asia

There are now 22 million new Internet users annually in the Southeast Asian region, but banking is often not technologically advanced. 

Railsback, solarisBank, TransferWise, and Rapid are just a few of the fintech companies that have expanded their presence in Asia this year. In early September, Revolut launched in Japan, which is now planning further expansion to the East. The Asian fintech market is interesting for many reasons: for example, Asian financial institutions trust European specialists more, and the regulatory framework of Singapore, Vietnam, and Indonesia is much more attractive in terms of technology development than laws in the United States. 

fintech startups 2021

The largest neobank in the world – Nubank (Latin American) has calculated that by the end of 2019 the Internet coverage in the region exceeded 66%, and the share of mobile users is estimated at 63 75%. 

About 70% of the local population does not use banks, so this niche is occupied by startups. A striking example is the Brazilian Nubank, which remains the largest neobank  (you may also like Top 10 White-Label Solutions for Neobanks) in the world in terms of the number of clients. Nubank’s services are used by 30 million people in Brazil alone, and its valuation reaches $10 billion. Many European players also enter the Latin American markets: ID Finance, Creamfinance, WorldRemit, and TransferGo.

Klarna Bank AB is a Swedish fintech company that provides online financial services such as online shopping, direct payments, and post-purchase payments. Their core service is designed to mitigate financial risk for buyers and sellers by managing store claims and customer payments. 

As of 2020, about 40% of all e-commerce sales in Sweden went through Klarna. In 2021, the company claimed a valuation of $31 billion. 

In February 2021, Klarna opened bank accounts for a limited number of users in Germany. Clients receive a full-fledged bank account with a German IBAN and a Visa debit card. 

The Swedish company Tink has raised $64 million in investment. This is  stated in the company’s blog. 

Tink has been operating since 2012, at the start the company offered a fintech service for private clients who could see and manage all their accounts through the application. The company then created an open banking platform that banks can integrate into their applications or create their own autonomous services on its basis. 

The lead investor in the round was Insight Venture Partners. The new investors are the former head of the Nordea financial group Christian Klausen and the founder of the fintech startup Revolut Nikolay Storonsky. Tink was also backed by European banks SEB, Nordea, and ABN AMRO, CNBC said.

fintechs gear up 2021

What are the benefits of working with fintech?

Fintech is a fairly new phenomenon for the global market. But this did not prevent its rapid development in any way. The economic crisis has spurred the emergence of many fintech startups around the world. European companies are no exception. They brought their products to the market on time, feeling a great demand from the population for high-quality service, fast service, and uncomplicated solutions. The lending market has proven this very well – they help out many Europeans. 

But for fintech to grow further and produce more complex products, it is necessary to increase the well-being of the population and increase its financial literacy. Fintech companies can help small and medium-sized businesses that regularly pay taxes and create jobs. Lending and optimization of financial processes within firms would help not only to stay afloat but also to grope for new growth points. After all, their success and survivability have a positive effect on the employment and paying capacity of the population. 

An increase in the level of prosperity of the population would allow the introduction of new fintech products in such areas as insurance, personal finance, and private capital management, exit planning retirement, blockchain, artificial intelligence, and predictive analytics in the corporate sector. 

Anyway, there are a lot of vacant niches in the fintech sector in Europe. You don’t have to come up with something new. You can see what has already been successfully implemented in other countries and apply it in your field, adapting the product to local specifics. 

Banks, in turn, despite mergers and acquisitions, need flexibility and increased sensitivity to the demands and needs of consumers, especially young people. It is not easy to restore public confidence in banks, but fintech startups can help in this, cooperation and support of which can bring more comfort to consumers.

digital-only banks

What is driving payment innovation?

Financial technology has become a new model for financial innovation. Fintech encompasses a set of complementary technologies – including mobile networking, big data, cloud computing, distributed ledger technologies, artificial intelligence, and data analytics – that collectively shape a wide range of operations in the financial industry.

Fintech fosters financial power and expands access to financial services using technological advances. It mitigates the risks and information gaps associated with underserved households and SMEs through digital financial services and improved risk assessment skills.

Specialized digital banking businesses serve specific sectors and demographics through B2C and B2B loans provided to individuals, households, and those who do not have access to banking services. At the same time, fintech not only improves the diversity and efficiency of financial services but also increases financial inclusion. According to a recent study, digital finance solutions can meet about 40% of the unmet demand for payment services and about 20% of the credit needs of poor households and small businesses in Asia.

The role of fintech as a driver of financial inclusion is strikingly expressed in financially underdeveloped emerging markets. A 2021 study confirmed a positive association between financial innovation and financial inclusion in a sample of six South Asian countries. A recent CB Insights report shows that clients in emerging African markets have benefited from digital microfinance, especially mobile payments, microcredit, and savings accounts.


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