COVID has changed many of our daily habits, including our banking routines. According to a study published by the independent financial advisory organisation deVere Group, the use of financial apps and mobile banking services has increased by 72% in Europe as a result of the pandemic. The fintech market is booming faster than ever and achieving new records every year. In 2021, 19 new fintech companies were added to the European rank of private company unicorns (according to Crunchbase's data), and this rise shows how the continent is becoming the lead in the fintech sector. From payments and e-commerce to investment apps and crypto, the EIC has funded many successful fintech applications over the last few years. Discover 4 EIC banking startups changing the way we bank.
Hokodo: a "trade-credit as a service" technology
Hokodo's B2B payments solution enables B2B merchants to sell more by instantly offering credit terms to their business customers, even on their first purchase. In turn, customers benefit from additional payment terms, interest-free, through a frictionless Buy Now Pay Later checkout experience. Over 30% of B2B trade takes place on credit terms, with trade credit representing the largest source of business financing in advanced economies. Yet current processes for offering trade credit are outdated and not fit for the digital age. Hokodo's digital platform solves these issues by providing merchants with a powerful set of solutions to manage trade credit and scale with confidence. Merchants that integrate with Hokodo see, on average, a 40% increase in revenues.
According to the Co-Founder and CEO of Hukudo, Louis Carbonnier, one of the key factors enabling the boom of successful new fintech companies is the ability to essentially start from a blank sheet of paper.
“In comparison with incumbent businesses whose legacy systems and processes might cause friction, this new wave of organisations has the freedom to choose the technology that's best adapted to the problem that needs solving”. The CEO also adds that a growing ecosystem of partners (VC investors, business angels, and public bodies) has made it easier for this new wave of fintech start-ups to succeed. "Having such a vast network of resources and specialist knowledge at our disposal is a time and cost-efficient way of removing blockers and securing the funding we need".
In June 2021, the EIC-funded company raised $12.5 Million thanks to the Series A Funding led by Mosaic Ventures with the participation from Notion Capital and prominent Angel investors. Hokodo is using the funds to develop its proprietary digital credit technology further and extend its services across Europe.
Clarity: a sustainability tech firm empowering investors to manage the societal impact of their portfolios
Clarity AI is a sustainability technology platform that uses machine learning and big data to deliver environmental and social insights to investors and organisations. Clarity AI enables anyone to manage the impact of their portfolios, no matter the size, through proprietary technology and machine learning around the most relevant industry recognised frameworks, including ESG, TCFD and UN SDGs. Clarity AI also supports regulatory disclosure and client reporting, such as those required by SFDR and EU Taxonomy regulation, to help investors meet new sustainability obligations.
"Our technology shows our clients how their investments and other organisations are positioned to impact the world. We are a tech-native firm with an innovative platform that can integrate directly into any client's systems. We already do this for large global platforms, including BlackRock's Aladdin platform, Allfunds, Manaos, the platform at BNP Paribas Securities Services, and Clearstream, which has clients in over 110 countries around the world", says Rebeca Minguela, Founder and CEO of Clarity AI.
The EIC-funded startup is now valued at $450 million after raising $50 million in its latest funding round, which closed in August 2021. SoftBank Vision Fund 2 led the round and was joined by the Fifth Wall ClimateTech Fund as well as existing investors -- BlackRock among them.
Billon: a blockchain solution that helps banks go paperless
Can a blockchain innovation build paperless offices across businesses and organisations? The British-Polish fintech Billon Group says yes. The company provides a Blockchain Platform powered by distributed ledger technology (DLT), based on a new type of architecture storing full documents entirely in the blockchain. The innovation aims to eliminate paper-based client-facing notifications in the polish banks and fully comply with the European Union's financial records-related regulations, including the European Union's MiFID II and GDPR.
"Managing documents on DLT is a much safer and cheaper solution than using paper," says Wojtek Kostrzewa, CEO of Billon Group. "It is gratifying to see banks as progressive institutions taking advantage of the regulatory compliant 'civilised blockchain' solutions Billon developed specifically for regulated industries like these", he adds.
The EIC-funded startup has many growing partners, including leading companies such as FIS, Raiffeisen Bank International and BIK (the Polish credit reporting agency).
INVOIER: a marketplace for fair and transparent trading of invoices
Invoier has developed Sweden's only real-time marketplace for invoices. The purpose is to enable better conditions for financing and growth of small- and medium-sized companies and open up the market for a new asset class for investors. The technical foundation of the offer consists of a unique AI-engine risk assessment method. European small- and medium-sized enterprises (SMEs) are forced to pay up to 60% for working capital, which is negatively impacting the possibility for growth and their competitiveness. This is what Invoier has set out to change by providing a marketplace where SMEs convert invoices into working capital. The marketplace is built on a unique AI-based risk assessment method, making it possible for professional investors to enter a new asset class and bid in real-time. The aim is to change the behaviour and challenge the EUR 3,000 billion factoring market by creating a fair and transparent marketplace through technological innovation.
“By harnessing the power of artificial intelligence to understand the risk in a company we are able to give so many entrepreneurs globally competitive financing to support their daily business. A lot of things are happening in the regulatory field around fintech that really creates opportunities but at the same time creates a costly barrier to entry for fintech startups”, explains Fredrik Mistander, CEO of Invoier.
Invoier started in 2018 in Stockholm and has been financed by the EU and KTH. In 2021, the company secured EUR 4.1 million equity funding from the European Innovation Council (EIC) Fund.
DISCLAIMER: This information is provided in the interest of knowledge sharing and should not be interpreted as the official view of the European Commission, or any other organisation.