Italian Fintech has a high growth potential and also has all the cards needed to support the country’s economy. This as was noted during the pandemic crisis, despite the small size of this ecosystem and the fact that the capital invested is still minimal compared to other countries, including neighboring ones such as France and Germany, not to mention the UK and the United States. This is the picture taken by the two teams of Fintech District and EY who collected together in the report “The Italian Wave” the fruits of a deep research that saw them personally involve the Italian fintechs in investigating the characteristics of the projects.

If you are interested in browsing the report, download it for free HERE

First of all, it should be noted that the number of fintech is constantly growing: in 2011 there were 11, reaching 199 in 2015, in 2020 there are now 345, many of which are based in Lombardy (169). As for the type, the most numerous are those dealing with crowdfunding (71), followed by those dealing with data analytics, machine learning and artificial intelligence (35), and those offering smart payments (34) and lending services (30).

And So how do Italians face this wave of innovation in the financial field? They are slowly beginning to trust these companies even if they still see traditional operators as their first point of contact. The scenario is evolving. On the one hand, 55% are turning first to the bank or traditional insurance company, on the other hand there is a strong growth rate of adoption of fintech solutions: +51% in 2019 according to the EY FinTech adoption index.

The investment situation is also evolving. The average value of those collected by each startup is about 700 thousand euros, with 95% reaching a post-money valuation higher than 1 million euros. It cannot be denied that compared to other countries we are lagging far behind. In 2019 Italy attracted only 2% of the total capital invested in fintech in Europe, compared to 50% in the UK and 19% in Germany. Some progress has been made in recent years when the gap started to narrow since financing to fintech startups has grown to a CAGR of over 60% from 2016 to 2019, with a record of 261 million euro. What about 2020? For now it is proving to be a positive year, with the Italian fintech ecosystem able to show important signs of resilience, also from the point of view of accessing new sources of financing: in particular, the main fundraising activities in the first 8 months of 2020 reached the figure of 90 million euros. These are positive numbers but one problem remains:there is a high concentration of investments in favor of only a few startups.

The report shows the need to launch specific investment funds and encourage collaboration between incumbents and startups and “do something more” by working mainly on three lines: tax breaks dedicated to corporate venture capital to make investment in innovation an opportunity, a greater ability of our entrepreneurs to think on a large scale beyond national borders, and a concrete commitment to talent and training.

A greater development of the fintech sector would bring benefits not only to the sector itself but to the entire national economic ecosystem, starting from SMEs that need more flexible and efficient services. In the meantime, cybersecurity will become a priority due to the challenges and critical issues related to the digital transformation together with reghtech, thanks to its compliance, and with Wealthtech, thanks to the progress made by artificial intelligence.

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Becoming general manager of ItaliaFintech in March 2020 Camilla Cionini Visani talks about the association’s mission but also about what should be done to promote the growth of the fintech sector in Italy.

Which activities does Italia Fintech carry out and which projects/themes is it developing?

Let me start by saying that in the coming years we will testimony an unprecedented further change in the financial industry landscape. Italian Fintech today is an industry characterised by strong growth, innovation, talented and competent professionals: it represents an opportunity for our country that should not be missed. Fintech is an enabler of innovation not only within the financial industry space but thanks to its innovative solutions on one hand allows corporates and SMEs to be more competitive and on the other side offers individuals new efficient and customer friendly financial instruments. Its leading-edge solutions can be easily incorporated – making internal processes faster and more efficient, widens the opportunities to grow with its digital financing products and offers customers secure and innovative digital payments solutions.

This is why ItaliaFintech was created in 2018 and today it is the Italian leading Fintech association. Our mission is to support and facilitate the growth of the industry. We are in constant dialogue with all institutional stakeholders and regulatory authorities at Italian and European level in order to ensure that there is a comprehension of the potential offered by this industry, promoting new measures and suggesting improvements to the current regulatory framework allowing Fintech to grow in a regulated manner and in compliance with without preventing to limit its potential. Moreover, our role is to “spread the word of Fintech” in all digital and traditional media through facts, figures and concrete examples on how using Fintech solutions is efficient, fast and easy.
We are currently very busy working on many projects for our associated companies. We have increased our presence in workshops and webinars and we are putting more and more our associates on stage in front of companies and professionals. Secondly, we have created internal working groups by segment where we share experiences, analyse trends and common issues and act accordingly. Finally, we have strengthened the dialogue with Ministers, Bank of Italy, CONSOB and all stakeholders generally speaking.
ItaliaFintech associates 23 best-in-class companies ranging all segments of Fintech: financing, digital payments, blockchain, crowdfunding, artificial intelligence just to name some of them.

What is the collaboration with Fintech District?

Fintech District plays a very important role for us with a very productive collaboration on various themes. First of all is one of our associated companies and also with an important role in our governance. Certainly, the area where collaboration is stronger is Education to Fintech. Together we will be shortly launching The Fintech Masteclasses, the first digital program for young professionals, executives and entrepreneurs on financial technology and innovation. Secondly, we collaborate on a number of reach out initiatives together with the Fintech District and the Milan Municipality to encourage and attract investors and talent in Milan aiming at strengthening Milan as a Fintech hub for Italy and Europe. We are currently working on a very important joint project, the Milan Fintech Summit, which will take place in December 2020 and will involve all key Italian and international leaders in the Fintech space. Last but not least our offices are located in the Fintech District in order to keep developing synergies and opportunities for the associates of ItaliaFintech.

3 assets of the Italian Fintech ecosystem

First of all, what call the 3S: speed, simplicity and security.
Secondly, Italian Fintech more than any other ecosystem provides tailor-made solutions for SMEs, which is truly the backbone of our economy since 92% of Italian companies are SMEs.
Finally, complementarity with banks and other financial institutions in a win-win mode for both.

3 aspects on which it should improve in order to be more competitive in an international context?

Regulation, capital and talent are the key elements to make Fintech successful in Italy.
I believe that Fintech represents a great opportunity to accelerate the development of new industry which is emerging worldwide and where there still is wide room for growth. As I just said, Italy should not miss this opportunity: Fintech needs to be top of the agenda for policymakers ensuring that the financial regulatory framework is inclusive and supportive for Fintech companies. Policymakers should introduce stronger tax incentives aiming at leveraging the many resources willing to finance equity and innovation. Attracting foreign capital and talent are the other two key ingredients for a successful development of the sector.

From your point of view today, how can Italian fintech contribute to the economic recovery and its post covid support?

In an environment which naturally leads to an increase in use of Fintech in everyday life of families and corporates, the economic emergency caused by Covid-19 has impressed an incredible speed to Fintech. The need of security and digitalisation, the difficulty of accessing physical locations such as banks branches, working from home and paperless all leads to a crucial role that Fintech solutions can play in facilitating and making access to financing and liquidity simple and fast especially for SMEs rather than evolving payment solutions and pushing forward collaboration with financial institutions.
In the first 5 months of 2020, financing to SMEs by our associated companies has increased by 4.5x from E90,3 ml in 2019 to E412,3 ml 2020 and the number of SMEs financed increased by 3.1x from 662 to 2.082 SMEs.
But even more relevant for the economy is the contribution that Fintech can bring in terms of innovative solution and innovation to traditional players in order to find new, more efficient and faster ways in the entire finance value chain. Digitalisation is a must and Fintech solutions are the way.

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