Fintech 25 November 21

France’s Fintech scene is booming – but it will have to keep innovating to stay ahead

By: Simon Voisin
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It’s fair to say that, like Cinderella, French Fintechs arrived at the ball a tad later than everyone else. But just like Cinderella, these Fintechs are now wowing everyone they meet and are looking set to seize the winning jackpot. Today, France is home to 735 Fintechs, and is one of the top three destinations for Fintech investors, raising a total of €1.9bn this year alone, putting the French Fintech ecosystem ahead of Sweden, its closest competitor. This level of investment is more than double the amount France attracted in 2020.

It’s a long way from 2017 when the newly-elected President of France Emmanuel Macron was mocked for declaring he wanted “France to be a start-up nation” at a time when investment in French start-ups was falling, while that in the UK and Germany was accelerating.

Yes, of course, 2014 had seen the arrival of neo-bank Compte-Nickel offering low-cost bank accounts, and 2015 saw the launch of Fintechs Pumpkin and Treezor. But these arrivals, followed in 2017 by the launch of mobile bank Orange, didn’t give rise to a French Fintech revolution.

What a difference a few years makes.

A boom time for France’s Fintechs

French Fintech start-ups are today reaping the rewards of the French Government’s determination to make France a nation of start-ups. Confidence is rising. Cyril Chiche, CEO of Paris-based start-up Lydia stated early this year, “Every big investor now stops in Paris.” October 2021 saw Paris-based Fintech Swile receive a $200 million investment from Japan’s Softbank to help its international expansion plans. This made it France’s seventh Fintech unicorn. Mobile payments app Lydia received $131million in Series B funding at the end of 2020, while this year French startup Ledger raised $380 million in its Series C funding round, taking its value to $1.5 billion. Things are definitely looking up for Fintech start-ups.

It’s not only French-based Fintechs that are enjoying this gold rush. Many overseas-based Fintechs are expanding into France; further encouraging investors to see the country as an attractive place to invest and grow business. San Francisco’s Square has moved in, targeting merchants with its ecommerce payment solutions, while UK-based connectivity platform Yapily recently established a presence in France. In June, Investment Fintech PrimaryBid expanded its London office to launch in France, in partnership with leading pan-European exchange Euronext. France’s Fintech market is tempting many.

And yet…

Hot on the heels of Swile’s October $200 million investment, Berlin-based neobank N26 received more than $900 million in Series E funding: the largest ever funding round for a digital bank in Europe, putting its valuation at $9 billion. Clearly, other countries’ Fintech companies and markets are showing no signs of slowing down, and they’re still well on track to compete in the finance innovation race.

So what do France’s 735+ Fintechs and seven unicorns need to do to keep up with the Fintechs in the UK, Germany and the rest of Europe? How can French Fintechs continue their boom? If France wants to be a major player in the Fintech ecosystem, innovation and international development will be essential.

Keeping up with the big beasts: a cross-border solution

With neobanking expected to show a revenue growth of 60.9% in 2022, France’s Fintech ecosystem is at a critical juncture. To catch up with UK and German Fintechs, many of the country’s Fintechs will need to partner with Fintechs outside of France, and crucially ensure that they can access new markets quickly and seamlessly.

Of course, Fintechs in France will want to take advantage of the boom in cross-border sales which are expected to reach £220bn in 2022, from £108bn in 2019. But with this comes challenges: the higher payment fees and conversion costs associated with cross-border payments, having to open up and establish relationships with banks in every country, being in compliance, and factoring in that almost 8% of international transactions are declined on the approvals journey.

Thankfully French Fintechs with an international development strategy don’t need to look too far to seamlessly integrate internationally, and keep ahead of their competitors at home and abroad – all while offering an excellent service to their customers. They can work with Currencycloud, experts in enabling seamless cross-border growth. A key player in the international payments ecosystem, Currencycloud helps Fintech superstars like Revolut, Starling Bank and Penta, and hundreds of start-ups access cross-border markets in over 180 countries worldwide, processing over $100bn in payments since its 2012 launch.

Currencycloud ensures Fintechs can move money seamlessly, with speed and ease. Its unique APIs solve some of the world’s biggest monetary challenges, and does so daily for thousands of Fintechs around the world. This means Fintechs, from start-ups to unicorns, can have the freedom to focus on their business: whether it’s embracing embedded finance, launching digital wallets or providing a best-in-breed remittance service.

With instant access to 38 currencies in more than180 countries, and the use of  Currencycloud’s local payment network, Fintechs can avoid the fees associated with international payments, and eliminate reconciliation errors to create a pain-free customer experience. France’s Fintechs can compete with major industry players and offer their customers real value because they have access to real-time FX rates that are close to the mid-market rate.

France has a thriving Fintech landscape today: by preparing to approach the international market by finding like-minded partners or using the services of Currencycloud (or both), French Fintechs can have the edge in an increasingly crowded market. All this, and not a fairy godmother in sight.

Find out how Currencycloud can help your Fintech continue to innovate and stay ahead, contact Marion Piedagnel at Currencycloud.

By: Simon Voisin

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