Paris is city of fintech love for start-ups

Fintech solutions have become a competitive tool for banks as online consumption and transactions soar

The fintech dating game is on in Paris. Entrepreneurs in Europe’s financial-technology sector are pushing low-cost payments solutions to steal market share from banks, hoping the challenge they pose will spur the lenders to buy them or seek partnerships with them.

Many start-ups are eyeing deals or potential backing as they converge on Paris this week to meet with the top executives of French finance, from BNP Paribas SA’s JeanLaurent Bonnafe to Societe Generale SA’s Frederic Oudea, at the city’s annual Fintech Forum. How fintechs defy incumbents is a prime theme of discussion there, with payments an area of focus, as banking alternatives from Alipay to M-Pesa already dominate in China and Africa.

“Banks will continue to acquire smaller and more nimble companies to add value to their products,” said Jacob de Geer, co-founder of Swedish payments company iZettle. “They need to innovate to keep customers, and they’ll continue going to fintech for that kind of innovation.”

Fintech solutions have become a competitive tool for banks as online consumption and transactions soar. Global investment in fintech was $8.2 billion (Dh30 billion) in the first nine months of last year, according to a KPMG report. At the Paris gathering on Tuesday and Wednesday, about 140 firms from more than 30 countries put their ideas on display, presenting everything from robo-advisers to artificial intelligencedriven wealth management.

‘Open world’

European companies are earmarking increasing funds for early-stage fintech projects, either through direct acquisitions or venture funds. Corporate venture capitalists poured more than $600 million into fintechs in Europe in the first nine months of 2017, the highest level on record, data by KPMG show.

“There’s a lot of room” for cooperation between banks and fintechs, and payments are likely to be an area where lighter regulation creates opportunities for disruption, BNP Paribas’s Bonnafe said at the forum. Whenever newcomers “can provide us with a better service or better approach, I can tell you we are really happy, because there are so many things to be delivered” for customers, he said.

IZettle, which has positioned itself as a cheaper alternative for smaller businesses that need to process card payments as well as other services, is preparing for an initial public offering this year but doesn’t exclude looking for private funding instead, De Geer said. The company is open to more partnerships after it expanded out of Europe to Brazil and Mexico through a deal with Banco Santander SA, its co-founder said.