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Fintech vs Blockchain: which one is the best investment option

A recent article by The Next Web (TNW) reports that although EU blockchain companies had a record year in VC investment, they were still lagging behind in fintech investments. They looked at Innovate Finance’s FinTech VC investment landscape report from 2018, which shows that fintech companies worldwide have raised $ 36.6 billion from VC investors. In contrast, blockchain and crypto-currency startups raised $ 3.9 billion from VC investors in 2018 (Q1 – Q3). TNW reported in the UK.

Further analysis shows that fintech companies like Revolut and N26 were more popular with investors than the blockchain. In fact, Challenger banks have raised $ 461 million in just 7 deals. These were followed closely by companies active in personal finance and asset management ($ 333.61 million) and alternative credit and financing companies ($ 306.64 million). Blockchain technology and cryptocurrency companies ranked well below, earning $ 174.67 million across 23 deals.

While the VC interest in blockchain and crypto-currency startups is growing, there is still a lot of catching up to do to match that of fintech companies.

Lithuania is becoming a fintech hub in the EU. Probably due to political uncertainties related to Brexit. 100 fintech companies applied for licenses as electronic money institutions, a third of which came from the United Kingdom. The Business Insider reported:

In January of this year, a total of 83 licenses were issued in Lithuania. It ranks second only to the UK among the EU countries. Companies like Google and the British neo-bank Revolut have successfully obtained a license in this country in the past.

Lithuania is known for its fintech-friendly ecosystem. Interest in the region is primarily due to the fact that, in addition to the benefit of regulation outside the UK, license applications can be processed faster than in other countries.

These factors can lead to the emergence of new fintech centers, but sometimes it remains doubtful whether they will be managed as well. The sudden increase in applications is no easy task for the Bank of Lithuania. It does not have the resources to handle all applications, says Marius Jurgilas, board member of the Central Bank. Therefore, they have decided to use a priority system and select the “least risky” candidates. Financial institutions using a license from Lithuania to hedge the consequences of Brexit may experience disruptions if there is no deal and they are not regulated on time.

The European fund managers had a very painful Q4 2018 with a loss estimate of $ 100 billion. Bloomberg reports:

According to Amundi SA, this is the amount of client funds that European open funds lost in the last three months of 2018, when the market was severely hit. The French company alone posted $ 7.4 billion in outflows in the midst of an extremely hostile market during that period, said Chief Executive Officer Yves Perrier on Wednesday. Other European companies have reported similar losses.



Also published on Medium.

Published inFintech

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