The European FinTech sector continues to navigate a complex economic and political landscape, balancing regulatory hurdles, funding challenges, and global competition – at a time when self-reliance and talent retention are more critical than ever.
A recent industry-wide survey from Started PR has shed light on key trends shaping the future of the sector, providing a critical temperature check on market sentiment, with 86% of respondents were Founders or senior-level professionals in FinTech and Tech.
While 50% of respondents view current market conditions as challenging or very challenging, an impressive 67% remain optimistic about the sector’s growth over the next year.
Investment, or rather the lack of it, remains a sticking point.
The record-breaking funding levels seen in 2021 appear increasingly out of reach, with 35% of respondents believing it will take until after 2028 for investment levels to recover. A more pessimistic 17% think the European FinTech market will never return to its former heights.
This dampened outlook on investment is coupled with concerns over Europe’s global standing, with 70% agreeing that the continent has lost its competitive edge to the U.S. in recent years – over 60% say the same about APAC.
Regulation has emerged as a significant concern, with many FinTech leaders pointing to Europe’s increasingly stringent regulatory landscape as a hindrance rather than a help. While consumer protection remains a priority, a growing sentiment among founders and investors suggests that Europe’s cautious approach may be stifling innovation.
Alex Mifsud, CEO and Co-founder of Weavr, commented: “Europe needs to rethink its approach to regulation. It’s not about removing regulation entirely, but striking the right balance. Policymakers should consider appointing a champion—who actively challenges excessive measures.”
Despite these concerns, the European fintech ecosystem still holds strong potential.
The UK, Germany, and France remain key hubs, offering deep talent pools and mature financial markets. London, in particular, continues to attract high-profile investments, and several European FinTechs are scaling successfully despite the broader economic downturn.
According to Ivan Wong, Investment Associate at Main Set: “With strong funding, talent, a supportive regulatory environment, and a thriving tech ecosystem, Europe is still an attractive investment destination.”
One recurring theme is that Europe’s fragmented regulatory framework poses a challenge for scaling across multiple markets. Unlike the U.S., where a single set of federal regulations applies, European fintechs must navigate different national regulations, making expansion more complex and costly. This regulatory patchwork is particularly evident in emerging sectors like crypto and AI-driven financial services.
Anastasija Plotnikova, CEO and Co-founder of Fideum Group, observed: “If I were launching a DeFi [Decentralised Finance] project, I would likely look to Dubai, the U.S., or Asia. The ease of setting up a company, taxation policies, and access to talent all play a role in these decisions.”
The report also highlights that while European FinTechs are facing increasing competition from global players, particularly in the U.S. and APAC regions, they still benefit from strong institutional support.
The most cited concerns were the region’s regulatory environment (42%) and limited access to funding (35%). Additionally, more than half of respondents (51%) believe that Europe’s current regulatory environment is either hindering or severely hindering the region’s competitiveness.
Ultimately, while challenges abound, this report highlights that the FinTech sector in Europe is far from stagnant.
Optimism persists, fuelled by the continent’s strong talent base, financial infrastructure, and a growing emphasis on digital finance. However, to remain competitive on the global stage, many FinTech leaders suggest that Europe address its regulatory hurdles, improve access to funding, and create a more favourable environment for scaling FinTech ventures.
Whether the sector can regain its former investment highs remains uncertain, but Europe is well-posiitoned to retain its FinTech talent and nurture future ventures – especially amid an increasingly distant U.S.
Whether the sector can regain its former investment highs remains uncertain, but Europe is well-positioned to retain its FinTech talent and nurture future ventures—particularly as the U.S. drifts further away.
Click here to read the full report.
Read the orginal article: https://www.eu-startups.com/2025/03/70-say-europes-fintech-edge-is-fading-can-the-sector-fight-back/
