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Overview of fintech startup market in Ukraine

Finance is something that every modern person faces many times a day and already ceases to notice. At the same time, today we have the opportunity to use such services and technologies that we could only dream of a couple of years ago. In our today's article we’ll talk about technology companies on the financial side (and this will definitely not be about the crypto ... well, maybe quite a bit!).

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World trends


Perhaps it’s worth starting with a figure that shows the true impact of innovation on the financial market: 88% of the companies that provide services in this market believe that their activities are under the pressure of innovative companies ( Ropes & Gray Fintech M&A 2019 study ). This means that almost no company, no matter how old it is in the market, can feel safe from the “young and green” innovators who are ready to destroy the foundations of the market.

Since x.com (later PayPal) appeared on the Internet, the Internet has ceased to be what it was before, since it began to carry not only information, but also money. But we will not delve into the history, but rather we’ll talk about what is relevant today from technology.

Digital and multi-channel banking - this applies primarily to traditional players in the financial market, banks that are “forced” to expand their boundaries of comfort (and banks are VERY conservative institutions) and provide their services, for example, in instant messengers. In addition, more and more banks give access to information about their customers through API, which allows new companies to build their services on the data that already exists in the banking sector.

AI has ceased to be just a buzzword on slides for investors, and has become a “workhorse”, which many financial clients are not even aware of. And now it’s not even about chatbots that try to show their “intelligence” in customer service, but about much more prosaic things, for example, a credit rating or segmentation of the client base.

Another trend that cannot be ignored is blockchain (it is the underlying technology, not the cryptocurrencies that are built on it). On its basis, much more decisions are being made for the financial sector than is generally believed by a wide audience: transparency, data verification, internal control - these are the processes that become more accessible in the financial sphere precisely thanks to blockchain technology.

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What is there in Ukraine?


Ukraine in the global financial services market is not yet represented in the most vivid way, but the domestic market has long been “disrupted” by the team, which today is known as the Fintech Band , and their product is growing at an amazing pace - Monobank . Despite the transition of Dmitry Dubilet, co-founder of the Fintech band, to the Cabinet of Ministers in the civil service, the project has maintained growth for six months and continues to please with new services (we recommend subscribing to the telegram channel Oleg Gorokhovskiy to keep abreast of what is happening). The same “gang” brought to the UK market the Koto project , which is somewhat reminiscent of Monobank, and at the same time is completely different.

If we talk about the categories of fintech companies, then according to the report on fintech companies presented last year in UNIT.city, the largest segment is the segment of payments and money transfers, in second place is technology and infrastructure, and lending services are the top three. It is worth mentioning a few more segments that are actively developing in Ukraine: online insurance, digitalization of traditional banks and neobanks (the same “Monobank” can be attributed to neobank).

One more thing


Let's quickly go over the main fintech market players in Ukraine. If we talk about the payment infrastructure, it is represented by several “monsters” - this is Privat24, which belongs to Privatbank (and from which “Fintech gang” came out), this is Wayforpay or Portmone. Before coming to the Ukrainian market, Paypal or Stripe, these companies feel very good.

Another segment that is actively developing are the “cloud cash desks” and systems for POS terminals. Here you can recall Poster POS, POSJam and SkyservicePOS, which help businesses serve customers.

But what about “crypt” ?!


If we talk about the development of cryptocurrencies in Ukraine, then the only exchange is Kuna, this is the “bridge” between cryptocurrencies and the hryvnia, which allows you to both buy cryptocurrency for the national currency and receive a hryvnia for the sale of cryptocurrency. Moreover, the news has repeatedly sounded about the creation or testing of the electronic hryvnia both under the auspices of the National Bank and with the participation of other process drivers. At the same time, the basic technology (blockchain / DLT) remains a hot topic for Ukrainian fintech startups. Although the hype around this term is no longer the same as it was a couple of years ago and no one plans to seriously create an “alternative bitcoin”. It is worth noting that the assessment of the importance of blockchain by banks and fintech companies is very different (banks consider the introduction of technology much more critical than fintech companies would like).

According to international experts, the implementation of DLT infrastructure by financial service providers can reduce 30–70% of their costs in areas such as financial reporting, compliance, and business operations. DLT solutions provide an opportunity to increase transparency, data verification, internal control, reduce the need for data harmonization, and also open up unlimited opportunities for data exchange.

Total


Fintech is clearly a hot topic for the Ukrainian market, but the views on the priorities and development of this market and its different participants differ (from minor changes to radically opposite opinions, for example, the remote customer identification system is the number one priority for fintech companies, but even not included in the top 10 priorities of banks). At the same time, state bodies have their own interests, which, most often, are manifested in the desire to collect as many taxes as possible.


This material was prepared specifically for Startup Jedi - online media about startups and investments in early March this year.

Article author: alexriabtsev , founder of the Startup.In.UA project

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