HomeKnow-HowFintech in 2023, the expert opinion and investor outlook

Fintech in 2023, the expert opinion and investor outlook

In 2022, European fintech was in its heyday. 22% of European unicorns in the financial sector and European fintech companies raised a total of $22.2 billion, making fintech the most-well funded sector in 2022.

However, the macro-environment has been jolted by rising interest rates and high inflation and economists are anticipating an imminent recession. Towards the end of 2022, we started to witness restructuring and mass layoffs across tech – including in fintech. Some of Europe’s fastest-growing fintech startups like Klarna, Uncapped, Freetrade, and Zego announced shocking layoffs. Investors are also remaining cautious about where they are deploying capital and fundraising seems likely to be extra challenging this year.

Despite all chaos, there are bright opportunities on the horizon for fintech. We should expect to see a market correction as the “growth at all costs” mindset moves out of the picture. Companies with compelling propositions and business models that prove sustainable unit economics will thrive in the storm – and investors are ready to deploy capital into these businesses.

Finch Capital research indicates that European fintech investors have an all-time high level of dry powder, of $28 billion of undeployed capital.

To dive into what we should expect to see in fintech this year, we caught up with some of Europe’s leading investors, founders, and operators to share their insights.


The fintech space is overcrowded. Most fintechs are loss-making, in competition for the same customers, and the current macroeconomic and fundraising environment makes operating increasingly challenging. We should expect to see more consolidation in fintech in 2023 with an increase in M&A activity in the sector.

Nina Mohanty, Founder at Bloom Money, predicts that a vertical within fintech where we will see consolidation is in embedded finance and Banking-as-a-Service (BaaS). There is a potential that they will be bought up by mature fintechs or banks acquiring their technologies or even entire companies. Gemma Young, Founder of Women of Fintech, thinks that “banks and fintechs are working together for mutual benefit for some time now” and that there will be more collaboration in 2023. Nina thinks that startups that remain in the market “will need to quickly mature their onboarding and customer support to better aid growth for their customers.”

Consolidation will also enable the next generation of fintechs as liquidity for shareholders will be unlocked and talent in acquired companies will likely be seeking new opportunities. Akash Bajwa, Investor at Earlybird, comments that “fintech is at the point of maturity where a generation of repeat founders will emerge to build the next set of categories, having been at the coal face for over a decade and having seen the opportunities that run across the gamut of financial services infrastructure.”

Focus on financial wellbeing and personalisation

With the current economic environment, we will see the rise of products helping consumers with financial well-being. Layla White, Founder and CEO of TechPassport, thinks that “consumers will expect more from their banks to assist them such as bill management, debt avoidance, and identity theft protection.

Beyond consumers generally wanting additional services from financial services providers, there will be a big focus on fintechs that focus on specific affinities and demographic segments. These fintechs aren’t aspiring to banks but rather to help consumers with financial management. Within Europe, we have seen fintechs that are helping certain demographics: financial management for Muslims with Kestrl, products that focus on helping women close the gender financial education gap like Your Juno and Alpher, and fintechs serving diaspora communities like Bloom Money.

The last decade has birthed fintechs that rival traditional banks with a more friendly customer experience from the likes of Revolut, Monzo, N26, and more. These companies have revolutionised enabling universal financial inclusion by making it easier for consumers to access a bank account and financial services. However, there is a demand for communities and segments of customers that have been traditionally overlooked and underserved to have products unique to their financial needs. Personal finance problems and needs are not a “one size fits all.” Different demographics and segments of the population have different lifestyles and consequently distinct financial needs. They may also make different financial choices based on their personal preferences and interests.

Nina from Bloom Money describes that “demographic groups will be held together by their values, lifestyles, or even protected characteristics which make them an interesting demographic to serve from both a product and commercial perspective. The strength of the community will necessarily dictate specific life events which products and services can be built around whilst the distribution directly into existing communities will lead to healthier unit economics.” Affinity propositions enable consumers to start to talk more about their finances or as Margot de Broglie, co-founder of Your Juno describes is “breaking the money taboo.”

B2B fintechs growing

Investors generally are continuing to remain bullish on B2B startups and exercise more caution when investing in B2C startups as consumers reduce discretionary spending and have less disposable income. Investment in B2B fintech in Europe to date has reached $18.5 billion in 2022, which surpasses the $7.5 billion invested in B2C in 2022.

From the perspective of a fintech investor, Akash from Earlybird suggests that with B2B fintechs’ “business models are more attractive in a recessionary/downturn environment”, especially in areas like “SaaS fintech verticals including workflow software for SMBs (e.g. accounting, AR/AP automation, cash flow forecasting) and enterprises (treasury, payment operations, reconciliation)” and “payment companies will continue to thrive.”

A potential web3 rebound?

Despite being in a crypto winter and the downfall of FTX, Terra, and Celsius in 2022, there will continue to be growth with startups enabling blockchain technologies in 2023. It’s estimated that by 2027, up to 10% of the world’s GDP could be stored in blockchain-enabled transactions. Juliette Souliman, fintech investor at Portage, believes that “technologies bridging Web2 and Web3 for wealth management will remain attractive opportunities in 2023.

There is a consensus across the fintech ecosystem that we should expect to see a slow recovery in web3, supplemented with further scrutiny and more regulation being brought into the space. Nina from Bloom Money describes this as an “opportunity for a reset” and if “the work being done to attempt to put trust “on chain” is done properly and sustainably can truly unlock a renaissance for DeFi.” Juliette from Portage comments that “the recent industry events (FTX, Celcuis, BlockFi collapse) have put the spotlight on the need for a more professional, efficient and robust ecosystem” and Portage specifically is looking to “partner with companies building a more secure, compliant and performant infrastructure for the digital asset industry.”

Amanda Pun
Amanda Pun
Amanda is passionate about startups, particularly in the FinTech and B2C spaces. She was one of the first employees of fintech startup, Homeppl, and has expertise in Product Management and Operations. She is based in London and originally from Canada.

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