Fintech, data sharing will be the next step for innovation

Italians are advanced users of digital to manage their finances: two thirds habitually use home banking and 65% use their bank's app. But when it comes to sharing information, they shy away: only a small minority, no more than 5%, are willing to make available a complete set of their financial data. Maybe it's because they don't understand what the banks use it for and how it benefits them, but the fact is that almost all consumers are extremely reluctant to provide information.

Yet, it is precisely data that are the indispensable foundation from which to develop the potential for innovation coming in financial services, driven by regulatory developments. From next year, the European Dora regulation will impose effective measures and continuous monitoring on operators to manage technology-related risks, with the aim of ensuring business continuity and data security in an increasingly digital and interconnected environment. The Fida proposal under discussion, on the other hand, aims to create a harmonised framework for accessing and sharing financial data, while also introducing a remuneration scheme for those who share it, offering a tangible advantage to institutions that hold immense information assets.

"Regulations may support a new wave of innovation: start-ups are confirmed as the engine of transformation in a phase of maturation and consolidation of the sector, and now regulatory changes may induce more innovation in the area of open finance," argues Laura Grassi, director of the Fintech & Insurtech Observatory of the Politecnico di Milano. It is therefore no coincidence that Api, the solutions that enable the adoption of specific innovations by incumbents, are by far the most widely used technology, followed, at a fair distance, by artificial intelligence. The Observatory itself, released today along with a guide dedicated to start-ups, emphasises how fintechs are evolving in their role as technological enablers rather than as direct competitors of traditional players: "A relationship made up of collaboration and complementarity with incumbents is increasingly developing, as they push in the direction of digitalisation and find solutions for very specific functions, already tested and effective, in fintechs," comments Grassi.

The fintech sector is experiencing a period of maturation. Although down from 622 last year, the 596 current innovative realities - by now largely no longer start-ups - have thus strengthened their position through synergies with industrial and financial partners: for the second year in a row, revenues have grown, to an average level of EUR 450,000 (+29%), and strategies focused on operational efficiency have led to an improvement in profitability, with 44% of fintechs forecasting break-even by the end of the year. Funds raised, up 44% to EUR 250 million, through traditional business angel and VC channels, are also on the rise. In terms of ecosystem integration, the report records a jump in direct funding from banks, both in terms of financial investment and partnerships. There are 86 active insurtech companies, 43% in assets, with funding up 39% to 34.8 million. The increase in investment does not, however, heal the paucity of available resources, which is at the root of the small size of fintechs.

Financial institutions, meanwhile, are focusing on younger users. The Observatory notes that today's teenagers almost exclusively use contactless payments (44%), but for the future they are focusing on instant payments, cashback, split payments and Bnpl. As they get older, the focus shifts to more sophisticated services such as savings products. "But banks must be careful not to consider young people only as potential future customers, but as current users with specific needs, to be satisfied with a dedicated offer," warns Grassi.