When it comes to attracting equity investment, financial technology has demonstrated remarkable staying power. As things stand, health is the most popular sector in Europe, but fintech is almost as well supported.
Here in the U.K., the health and life sciences sector attracted $1.8 billion in the first quarter of 2025, but investment into fintech remained buoyant at $724.1 million, according to HSBC Innovation Banking figures. Meanwhile, across Europe as a whole, Dealroom data shows fintech raising $4.1 billion, just a little bit behind the health sector figure of $4.4 billion.
So why the continued interest? A decade ago, consumer-facing challenger banks, such as Revolut and Monzo, were the poster children not just for fintech itself but also for the wider innovation economy. Since then, there has been a boom in payment ventures and a growing market for back office tools aimed at helping financial institutions to become more efficient. By now, you might be forgiven for thinking that most of the problems identified by the fintech pioneers have been well and truly addressed.
But as Jam Hammer (a partner at VC firm Index Ventures) sees it, a new crop of financial technology companies are building on the successes of the past.
“Fintech has delivered breakthrough after breakthrough,” he says. “The first wave of fintech entrepreneurs have now graduated and are becoming mainstream. That’s giving way to a second wave in which founders are founding again and operators are becoming founders.”
James Codling, a partner at U.K. VC firm VolutionVC agrees. He sees huge potential in a sector that extends well beyond providing solutions for financial services per se and now includes segments such as insuretech and compliance tech.
Continued Disruption
“Fintech will be a defining part of our growth over the next 10 to 20 years. We see a lot of disruption in that space,” he told me when we spoke a few weeks ago. “ We are getting to the point where we have a number of fintechs that have scale in the UK and scale globally. It is quite an exciting place to invest, and I think that will continue.
So it seems there are still big problems to solve, many of them hidden away in the back office functions of financial services companies and corporations.
Duna is a compliance fintech that has just raised $10.7 million from VC Index Ventures. The company’s platform is designed to streamline an onboarding process that requires companies to carry out extensive “know your customer” (KYC) checks to minimise the risk of money laundering, fraud and other criminal activities.
Duco van Lanschot – who co-founded the company with David Schreiber – says that simply checking the identity and integrity of potential business partners is not only a challenge for individual businesses, it also slows down economic activity.
Duna’s platform has been used by Benelux retailer Bol and Van Lanschot uses this relationship to describe the problem his company is solving. Like Amazon, Bol hosts a marketplace of third-party resellers. Onboarding a new partner involves stringent and ongoing checks.
“If you are a third party, you have to onboard, and there are a lot of checks,” says van Lanschot.” “The platform needs to check your identity and whether your company exists. They also need to do sanctions screening. All this needs to be done consistently, so that you don’t start off as one thing – say a puzzle company – and later start money laundering or selling other goods once you have established credibility.”
The onboarding process can be arduous, time-consuming and frustrating. “When we started the company we onboarded with one of Europe’s largest banks. It took almost three months,” recalls van Lanschot.
So Duna was founded on the belief that even today existing KYC solutions can be improved. In practice, the platform gathers and analyses data from multiple sources and can, the company says, cut onboarding times from perhaps seven or eight days to a couple of hours. This in turn provides customers with a commercial advantage. “Compliance is a hygiene factor, but once that bar is met, business onboarding should drive revenues,” says van Lanschot.
Payment Still A Work In Progress
The opportunities pursued by fintech companies are not limited to esoteric functions such as compliance. There is room for innovation in segments of the market that you might think are already well-served.
Payment is a case in point. In both the B2C and B2B marketplaces, payment solutions are commonplace. Some provide consumers with a means to buy goods and transfer money easily, while others help businesses to trade more easily with customers and suppliers. But is there room in the market for new players?
Bogdan Uzbekov thinks there is. A former product lead at Revolut, he has founded Apron, a company that provides payment services aimed primarily at small businesses.
Uzbekov saw a difference between the payment solutions created for consumers – which, he says, tend to be slick and user-friendly – and those designed for businesses.
“I started talking to business owners in London and I discovered that business payments lagged behind – by a decade, maybe to consumer payments.”
Based on this premise, Uzbekov set about creating a tool that could significantly cut the time small business owners spend paying employees and suppliers. As he explains, honoring bills could mean an owner using a range of apps, including accounting, approvals, invoice processing and banking. Apron brings the process into one place. “It can cut down hours of work to minutes,” he says.
It perhaps seems odd that so late in the fintech story, there is still a gap in the market for easy-to-use tools aimed at small businesses. One possible reason is that the target customer is difficult to reach. As Uzbekov points out, unless you’ve run a small company, you can’t really understand the challenges. “For that reason, our first hire was a customer research expert,” he says.
But what about the bigger picture? Will fintech continue to be a major force in the innovation economy, or is the revolution more or less complete? “I think in the consumer and Internet space, the leaders are now more or less defined,” says Uzbekov. “If you want to build a new bank, it’s too late. But there are new platform shifts, such as AI, which will shuffle the cards.
And Uzbekov sees rising demand for business products that replicate the usability of consumer tools. That’s partly because the upcoming generation of late millennials and Generation Z – who are famously wedded to their seamlessly usable tech – will be the small business owners of tomorrow.
There are other factors driving the resilience of fintech. For instance, in the compliance space, regulation – not least around money laundering – is driving innovation. There are also new EU rules on identification and authentication coming into force – namely, the eIDAS 2 directive – that will drive adoption of compliance tools.
Then there is the flywheel effect. Uzbekov brings his experience from Revolut and Square to Apron, Van Lanschot and partner Schreiber met as employees of the Trade Republic Bank. People with experience of the fintech market are bringing their expertise to new businesses.
As Hammer sees it, the sector is “compounding,” with factors such as veteran teams, AI and data breakthroughs opening new opportunities.
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