FinTech is globally considered as one of the hottest sectors in startups right now, with VC fundings having been tripled between 2013 and 2014, topping $ 12.1bn.
The potential of technology disruption in the financial and banking services seems to be so strong that even banks and payments facilitators are tapping into FinTech, backing or accelerating such startups. In the meantime, traditional tech companies that had nothing to do with financial services, like Apple, Samsung or Facebook, are building FinTech solutions to incorporate in their tech products.
In Greece, the attention towards digital banking and financial services has been turned the last couple of years and it came back in the spotlight last summer, after the impose of capital controls in the banking system that followed a snap referendum call by the greek government. More individuals and more businesses looked into electronic means of banking and payments; even alternative currencies like BitCoin hit mainstream media for the first time.
However, the sector appears to be limited in the country, as only few independent companies are growing up.
Most important 'player' is currently Viva, a company that became known for its booking services provided for flights and other means of transportation, as well as theatres, cinemas and other spectacles. In 2014, Viva became the first greek company to be granted a Electronic Money Institution license by the European Central Bank, which allows them to offer payments and e-banking services in the 31 countries of the European Economic Area. Viva's flagship product is Viva Wallet, which allows users to connect their bank accounts and pay vendors as well as for bills, utilities and more online. Viva's mobile wallet is also letting users transfer small amounts of money to each other, opening up the market of peer-to-peer payments in Greece. With around € 6mn raised in 2014, Viva is also opening up to the physical channel of commerce, offering POS solutions to vendors.
Beyond Viva, we can only see a handful of companies falling under the FinTech definition, with several of them developing e-invoicing and accounting products. Bootstrapped Billit.io and StartTech Ventures-backed Elorus (with € 50k) being the most well-known ones.
On the insurance market, Hellas Direct is the first car insurance company in Greece to offer their services exclusively on the Web. Registered in Cyprus, Hellas Direct started up in 2012 from former investment banking executives and in 2015 they raised $ 6mn from Third Point and Endeavor Catalyst. On the same sector, there are several aggregators, with InsuranceMarket.gr being the biggest online aggregator and broker for vehicle, home and private health insurance. Started in 2012, their founders are pushing for the pension market in Greece being reformed, opening up a bigger opportunity for the private market.
On the BlockChain technology, Warply's - a mobile marketing company - founder John Doxaras launched recently BlockPoint, a platform that allows users to create mobile wallets, loyalty schemes and other FinTech products through dedicated SDKs on top of BlockChain and BitCoin transactions.
Finally, there are a few companies in various sectors; for example trading, where ZuluTrade, founded in 2007 by former AIM-listed InternetQ's co-founder, serial entrepreneur and angel investor Leon Yohai, has topped 120 employees by 2015, and crowdinvesting, where OpenCircle launched in 2015, allowing for companies to post their business plan and request funding from accredited investors.
FinTech got the 'flavour of the month' for Greece after the capital controls of July and the interest in electronic payments or alternative currencies like BitCoin, but what it's really interesting with the greek case is that banks themselves, rather than independent startups, are appearing to be driving the introduction of technology into their ballgame, by being active and mobilised about offering digital services.
Every major bank in Greece is offering their own e- and m-banking services via branded applications and is building rewarding and loyalty programs to shift their customers to using them. A couple of years ago, they were the ones that introduced mobile and NFC payments in partnership with greek telecommunication companies, while now they're even introducing mobile apps for peer-to-peer micro-payments.
So, the opportunity for startups in the FinTech sector in Greece could be traced in:
- The wider financial, economic and tax environment under which Greece is operating. It can help companies that revolutionising the 'money sector' grow, as there is always an open agenda about services that will help sectors of the greek economy (and the greek state) to eliminate expenditures, tax evasion and corruption.
- Banks in Greece having already recognised the potential of digital services. They have introduced their own solutions, which could lead to synergies and support towards startups innovating in the field. At least four greek banks are running programs that fund or incubate startup companies, while more initiatives particularly targeted at the FinTech sector are expected to be launched soon.
- The huge amount of bureaucracy and other structural inefficiencies that greek banks as organisations are consisting of. There is a critical mass of frustrated customers out there willing to become the early adopters of new solutions.
- The awareness that has been raised and the attention that has been given after the capital controls and after the rise of Viva as a company that has the potential to become the greek equivalent of the 'PayPal mafia'.
- The fact that apart from maybe Viva, there isn't any other big independent player in the market right now.
Indicative of the unexploited potential disrupting the financial services in Greece can have is the fact that a couple of international players have opened up their services in the country. In 2014, Helsinki-based Holvi launched their e-banking services for small enterprises and individual professionals in Greece alongside several european markets, while in late 2015 Berlin-based NUMBER26, which is backed by Peter Thiel's Valar Ventures, started offering their mobile-only banking services in Greece.
On the flip side, while FinTech is getting quite some talk about it lately in Greece, there are several negative factors that could prove it harder for the sector to accelerate:
- The tax and economic environment again, but the other way around this time, is making more appealing to consumers and vendors to tax evade, rather than use electronic means of transactions.
- Although the majority of Greeks are smartphone users, the widespread use of cash and the elderly population make Greeks unfamiliar or unwilling to use digital services for payments and banking.
- Physical vendors are neglecting to equip themselves with POS devices, which limits the use of credit/debit cards.
- Figures are showing that despite the increase in e-payments right after the capital controls, now that the controls are being loosen up, we in turn see a decline in e-payments.
Although 2016 started with mixed signals from the greek government (at one time it was considered that digital transactions would be promoted in an effort to fight tax evasion and at another it was considered that they would be taxed so that the state income could be increased), FinTech is expected to be one of the sectors the greek startup scene is going to be talking about the next months.
This post first appeared on HuffPost Greece.