January 9, 2024

What’s in store for European fintech in 2024? The experts give their predictions

2023 ended up being not only a slow year for fintech, but an undeniably tough one. So what does 2024 hold?

When Sifted asked experts at the end of 2022 what they expected to see in fintech in 2023, they said more of the same: after the funding bonanza of 2021, 2022 had been a very slow year and 2023 was unlikely to be any different. 

It ended up being not only a slow year for fintech but an undeniably tough one too. 

2023 saw fintech fall far behind in overall fundraising, as VCs instead opted for investments into climate tech. On the regulatory front, Europe’s biggest privately owned tech company, Revolut, finished 2023 still lusting after the UK banking licence that continues to elude it. 

Elsewhere, it was a good year for German fintech unicorn Trade Republic, which was granted a full EU banking licence, and a bad year for French insurtech Luko, which was placed in receivership after its €14m deal with incumbent insurer Admiral fell through.


So what is in store for 2024? Sifted asked experts for their predictions. 

Third-party compliance will become a new focus point for fintechs

Stéphie Ndinga, Chief Compliance Officer at Swan 

In 2023 we have seen the costly implications of fintechs choosing not to scrutinise third parties for compliance — most recently in the case of German BaaS provider Solaris. This has served as an important reminder of the reputational and financial risk that can come with insufficient checks and monitoring of partners. As regulators continue to crack down on third-party compliance, investing in in-house compliance departments will serve fintechs well in 2024, ensuring that the right risk monitoring and onboarding processes are in place.  

Banking-as-a-Service (BaaS) startups will need to have a rethink on regulation

Marius Galdikas, CEO at ConnectPay

One area where flexibility is crucial is in the matter of compliance. Because the BaaS provider holds the banking licence that allows fintechs to offer financial services to their users, it is the BaaS provider that is ultimately responsible for the security of those users’ assets and information. With regulations and risk management requirements becoming more strict, BaaS providers must be ever more prepared to ensure a high level of security and reliability. Where compliance has typically been handled by BaaS providers’ fintech partners, that responsibility is shifting more and more onto the shoulders of BaaS providers themselves.

BaaS providers need to embed compliance into their offerings. Alongside traditional services, like accounts, payments and cards, BaaS providers could also handle onboarding, authentication and monitoring. By offering embedded compliance, or compliance-as-a-service, BaaS providers can reduce the complexity of maintaining compliance, thereby allowing fintechs to focus on their core business, which is one of the principles that gave rise to BaaS in the first place.

Account to account payments (A2A) providers enter the fray

Lucile Cornet, partner at Eight Roads Ventures Europe 

There are more than 400 open banking tech providers in Europe alone — but they are largely limited to domestic transactions made on single currencies. Interoperability is key from the consumer perspective, and several players are looking to build a global network challenging today’s card network. In 2024, we anticipate a further expansion of fintech A2A companies into new geographies, enhancing their global presence. This expansion will not only encompass tools for merchants to integrate open banking payment options at checkout but will also introduce innovations such as "smart routing", risk management, instant payouts and payment links, challenging the traditional card network infrastructure.

Crypto won’t make a comeback

Carol Hagh, portfolio non-executive director and Chair of Screening Committee at Harvard Business School Alumni Angels of the UK

I don't see crypto making a comeback in a mass or retail sense but still see the significant potential value of blockchain technology and for tokens within closed, trusted ecosystems. Within industry markets like insurance, it can take friction out of transactions, enabling lower cost and greater speed, where the compliance risks, fraud and other issues are significantly reduced within a closed group of trusted parties. It has potential applications across healthcare data management and creating transparency and traceability in supply chains — again where you have a manageable number of transacting parties who are trusted and verified. 2024 might be the year that we see serious use cases and commercialisation.

RegTech enters the fray

James Devlin, Fidelity International Strategic Ventures

Following a series of large fines in 2023, regulators will continue to put pressure on financial institutions, large and small, who are not keeping pace with their regulatory obligations around the monitoring of staff communications. As regulators increasingly seek evidence that firms are using up-to-date tech in this space and are taking serious steps to perform adequate oversight, there will be significant upside opportunities for RegTech firms addressing these challenges.

The ‘pass the parcel’ VC funding game will descend into chaos 

Curt Hopkins, founder of Consilium Ventures

The venture model of passing an investment to the next-stage VC at a higher valuation is broken and won’t improve in 2024. Therefore, bridge rounds will continue as the primary strategy to avoid downrounds and, sadly, this will lead to less-established VCs becoming poorer. 

Consumers want payments to be easier and will vote with their feet 

James Booth, VP Partner Management EMEA, PPRO

We will see a further rise in alternative payment methods, which could take the form of bank transfers, e-wallets or buy now, pay later (BNPL). For instance, British consumers are already using alternative payment methods in more than 50% of online transactions, according to our latest data. Consumers are moving away from wanting to type in their card details on their mobiles, or type in their pin numbers at a store. With 60% of Brits shopping online using a mobile device, they are increasingly choosing alternative payment methods that make their checkout easier and provide a more holistic shopping experience. 

Agree? Disagree? Do you have any thoughts on fintech in the year ahead? Drop us a line here

Orlando Crowcroft

Orlando is commissioning editor at Sifted. Follow him on X and LinkedIn