2022 was a difficult year for the financial and insurance world in the face of drastic changes in geopolitical and macroeconomic conditions. But that hasn’t stopped innovation. Also in Italy, where 27 new fintech start-ups were born this year, bringing the total number of active innovative companies to 630. Furthermore, loans reached a record of 934 million euros, just a breath away from the one billion milestone, bringing the total from 2009 to today to 3.7 billion, with two Italian companies (Scalapay and Satispay) reaching the status of unicorns .
Records collection
«Overall, the Italian ecosystem has been less affected by the international crisis than the rest of the world. The collection of Italian startups was record and revenues are growing strongly, by about 70%. Evidently the starting points were not so high, but the trend is certainly very positive», comments Marco Giorgino, scientific director of the Fintech & Insurtech Observatory of the Milan Polytechnic, who is presenting the report on the sector today. «The 27 new start-ups testify to the presence of new ideas and the entrepreneurial will of Italian founders. On the demand side, more and more customers are educated in the use of digital banking channels, with a penetration of 63% in home banking and 55% in mobile banking».
Good growth, small market
However, the system continues to suffer from old problems. The level of investments remains decidedly low compared to the other European markets: the United Kingdom confirms itself as the cradle of fintech with half of the 35 billion euros collected in the last five years, but France and Germany stand at levels above 3 billion. Furthermore, a high level of concentration remains: almost all of the funds are in favor of a few realities (5% raised 90% of the total); Milan is the center that catalyzes investments (69% of the total) and there are sub-sectors that are still struggling to take off, starting with insurtech, which attracted only 6% of total funds in 2022. «Despite the good growth, there is still a gap with the other countries – continues Giorgino -. It must be considered that the Italian market is a small market compared to many others. The continuous growth, the great attention of the supervisory and regulatory authorities and the convergence also on the part of other stakeholders, however, raise awareness of the potential”.
Revenues improve
The Observatory’s report underlines that in 2022 there are positive signals on revenue growth – the median revenues for start-ups expected at the end of the year are almost double compared to the previous year -, but Ebitda and positive cash flows are still not being generated stably , little attention is paid to foreign markets (only 44% are able to offer their services abroad), international funds are not permanently attracted and the effective results of partnerships still appear too limited. «We need a joint work of all the stakeholders involved: national and international VCs, incubation centres, universities, authorities and government. Start-ups should broaden their perspectives, look more at foreign markets, pay attention to governance, know how to balance listening and stubbornness. Even the incumbents, however, can and must have a role, by innovating, having the courage to collaborate more with all the players in the ecosystem».
Embedded finance
An increasingly evident trend focuses on Banking-as-a-service, with an operating model that envisages an authorized financial institution offering its services and its license to an unauthorized actor, any digital company, which will deal interactions with the end customer and user experience. Then, when the product of the financial intermediary is integrated into the customer journey of non-financial players, we are in the field of embedded finance. And consumers are today more than ever open to this type of financial services proposal from specialized operators, while they are wary of offers from non-financial players.