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Insider Tip: FinTech Location Vienna

Developments in recent years as well as the wave of digitalisation have driven the Austrian capital in this direction. Themed events such as these underscore Vienna's reputation as an ideal location for FinTechs, thanks to its fertile ecosystem, interesting cooperation partners such as banks and insurance companies, accelerators, a growing venture capital landscape and a public administration open to technical innovations. In the meantime, Austria has even emerged as a trailblazer when it comes to e-Government and cryptocurrencies.

As one of Europe's top five ICT cities with about 5,800 ICT companies generating annual revenue of about EUR 20 billion, Vienna has seized its opportunity to successfully move into this segment. The "Vienna Region" (Vienna, Lower Austria and Burgenland) accounts for a good two-thirds of Austria's entire ICT revenue and lures an increasing number of startups in this field.

Cooperations between banks and FinTechs

Once stigmatised as a nightmare by traditional financial institutions, FinTechs have increasingly become sought-after cooperation partners. According to the report "Customers in the spotlight – How FinTech is reshaping banking" put together by PwC, 76 percent of banks across the globe believe that FinTechs are challenging them for parts of their business. For this reason, they are well advised to get these FinTechs on board early enough.

For example, the Erste Group in Austria is working together with the Fintech startup predictR to press ahead with its Group-wide innovation strategy. On the basis of its #glaubandich (believe in yourself) challenge, the bank is actively looking for innovative startups such as getsby, one of the finalists which attracted a great deal of attention this year due to its digital solution for restaurants i.e. to pay with an App instead of having to wait for the waiter!

In the future, the Erste Group with its banking platform "George" wants to integrate plug-ins from third-party developers in its offering. "George", the online banking system of Erste Bank und Sparkassen, has already attracted 4.7 million users in four countries (Austria, Czech Republic, Slovakia, Romania), making it the biggest cross-border banking platform in Central and Eastern Europe. In the starting phase in 2015, the banking group already constantly emphasized the fact that it wanted to open up George to external developers and service providers. Now it is moving ahead to fulfil this promise and is actively inviting third-party suppliers to participate. The newly designed website of George Labs is the first point of contact for this purpose.

The Austrian bank Raiffeisenbank, which actively operates above all in Eastern Europe, is also moving in the same direction, and already opened the second call with its "Elevator Lab", luring FinTech startups from all over the world. The accelerator programme "Elevator Lab" launched in 2017 targets the fields of Payments & Transactions, SME Banking, RegTech, Branch of the Future und Big Data Analytics. Furthermore, Raiffeisen has introduced a CEE Fintech Atlas, presenting the Vienna catchment area as an expanded ecosystem for Central and Eastern Europe.

Vienna: fertile ground for technological innovations

According to the International Monetary Fund (IMF), Vienna ranks among the most important financial centres in the world. Austrian banks have about 50 million customers in the region. In connection with startups in the field of payment services, this fact offers fertile ground for technological innovations. For example, Austria is considered to be a forerunner in this area due to its e-card (social insurance smart card) and the early introduction of Near Field Communication (NFC).

Austria continues to be a country in which cash plays a major role. Nevertheless, the people readily accept some services. The bottom line is that Austrians are more technologically friendly than their German neighbours. When it comes to mobile payment systems, 11 percent of the Austrian population already use this option to pay with their smart phones, compared to only five percent in Germany.

Digitalisation is changing the financial world from the bottom up. Breaking down old structures and enabling completely new business models. Young Austrian financial providers and startups from all over the world settling down in Vienna ensure a breath of fresh air thanks to their new business ideas and innovative technologies. These include Bitpanda, Bsurance, Cashpresso, N26, Kompany, to name just a few.

Organisations such as Bitcoin Austria, RIAT (Institute for Future Cryptoeconomics), the Blockchain Centre Austria as well as the Viennese City of Blockchain initiative or the Fintech Austria association underline the role of Austria, and Vienna in particular, in the FinTech sector.

On balance, a growing momentum in the domestic FinTech ecosystem is perceptible compared to previous years. This is reflected in the increased number of inquiries received by the Austrian Financial Market Authority. This body has responded to this demand, for example by setting up a "FinTech Point of Contact" as a one-stop-shop.

The Austrian Federal Government also planned regulatory sandboxes, designed to provide a test environment for FinTechs in Austria. This should be implemented once the new government is sworn into office.

Austria as Europe's hub for cryptocurrencies

Austria is seen throughout Europe as one of the hubs for cryptocurrencies, which is attributable, last but not least, to the "House of Nakamoto" in Vienna or the above-mentioned Viennese firm Bitpanda, one of Europe's biggest "cryptobrokers". The first Initial Coin Offering (ICO) in line with Austrian law took place in September 2017 when Herosphere launched the "Hero". The Linz-based accelerator Startup300 is also launching various offerings related to ICOs.

Naturally conventional venture capital is also relevant to Fintechs. Here Austria not only features the firms Match Maker Ventures and MEP Mobile Equity Partners but above all the Viennese company Speedinvest, a globally relevant player which already boasts a comprehensive international FinTech portfolio. Speedinvest has positioned itself since 2016/17 as the most active venture capital company in Europe.

More information about Fintech Week Vienna can be found here.

Read also the blog post about "Startups in an enterprise environment - how companies can profit from startups".

Dr. Doris Dobida

Director Northern Germany
+43-1-588 58-220 or +43-676-4454460

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