Financial platform ConnectPay has identified significant gaps and inconsistencies in the available data on Europe’s fintech industry, prompting the launch of the European Fintech Index (EFI).
According to ConnectPay, the lack of uniform and credible data sources, coupled with varied definitions of ‘fintech’, has made it difficult to accurately track the industry’s development.
The World Bank‘s Global Findex Database, the latest data set, stopped updating in 2021, causing many countries to rely on outdated information. Currently, only a third of European countries use data newer than 2021 to present their fintech ecosystems, which limits the ability to make informed comparisons and decisions.
The EFI analyses markets through three dimensions: business attractiveness, market attractiveness, and fintech attractiveness, which reflect key strengths and potential areas of growth for fintech ecosystems of 32 European countries. The project also seeks to spark discussions on standardising fintech definitions and improving market transparency, inviting experts to contribute to the ongoing refinement of the Index.
Marius Galdikas, CEO of ConnectPay, said: “The Index provides an unbiased view of the data on fintechs. Combined with the option to filter data based on case-by-case relevance, it enables decision-makers on any level — fintechs, investors, or regulatory authorities — to make data-backed choices that could lead to greater industry growth.”
The EFI
The overall rankings of the EFI may be surprising for some. For instance, the Index positions vibrant fintech hubs like the UK and France in ninth and tenth place overall.. On the other hand, smaller countries like Estonia and Luxembourg rank fourth and fifth respectively.
The EFI also points out the issue of inconsistent definitions of ‘fintech’ across the industry. For instance, Eurostat and the European Banking Authority (EBA), each have their own definitions of what a fintech is. According to Galdikas, varying definitions impede accurate tracking of industry’s progress and hopes the EFI will help raise relevant discussions.
“It’s more of a question of what should still fall under the term, and what should probably be omitted. Some rankings go as far as including pension funds, which can potentially skew market data when analysing fintechs in particular.”
Following the launch of the EFI, ConnectPay will invite market experts to provide insights on improving and enhancing the Index.
“The contribution of experts will be essential to the success and possible growth of the European Fintech Index. In any case, sparking more conversations that could increase market transparency, specify the definition of fintech and help track the progress of the industry would already be a great success,” Galdikas said. “Besides, by sharing ideas and insights we could reflect on, we might expand the Index in the future, making it an even more in-depth and dynamic market analysis tool.”
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