Ahead of Money Motion 2025 | Alex Panican Talks Fintech with Netokracija

The LHoFT’s Deputy CEO, Alex Panican, will be heading to Money Motion 2025, the biggest fintech conference in Southeast Europe. Ahead of the event, he spoke with Netokracija, a top digital media platform covering startups, innovation, and tech in the Balkans.

In the interview, Alex dives into the current state and future potential of the fintech ecosystem in Europe with a focus on Luxembourg and Croatia. From cross-border collaboration to the rise of digital finance hubs, he shares key insights on what’s driving growth and innovation in the sector.

How does European fintech currently compare to global players like the US and Asia?

Like in every interesting story, there’s good news and bad news. 

The good news is that the European fintech ecosystem is resilient: based on the latest reports, we have around 11000 fintechs in Europe, compared to 13000 in the US and 6000 in the APAC region. We also saw an increase in funding for fintechs in Europe, reaching almost $9 Billion in 2024 (+11%), compared to $10.4 Billion in the US (-39%) and $6 Billion in APAC. 

The bad news is that the US is still ahead in the number of funding deals and is much more attractive for EU fintechs when they do their IPO, Klarna being the latest example. The US provides a much deeper VC and capital market, there’s definitely more unicorns and higher evaluations on the other side of the Atlantic. Fragmentation of the EU consumer market and differences in regulation are two other weaknesses we face, making scaling across the continent look like an obstacle course. 

That being said, I am very positive for the future of the European fintech ecosystem. Some EU regulations, like MiCA for digital assets, will facilitate comprehension and standardization. And there’s a strong political will to boost funding and scaling across the continent. It’s time we start building World champions. 

Which European countries are leading in fintech innovation, and what makes them successful?

To nurture fintech innovation you need 4 things: 1. the right Regulation, allowing fintechs to flourish, 2. a great Ecosystem, composed of available capital and supportive stakeholders, 3. Expertise, a talent pool with financial and technological knowhow and finally 4. a Market, enough clients or customers to support your growth.  

Based on those four elements, the UK is still ahead in the number of fintechs and capital raised. Then, I would like to think that Luxembourg is at the top of the list as a key country for fintechs in Europe, hosting the best innovators that are providing tech to the financial sector. It’s also one of the best places to set up, raise capital and scale across Western Europe. 

The other key countries are obviously the ones that have a large population, being very attractive for fintechs that are in payments or lending, like Germany, France, Poland or Italy. Even if those countries have strong banking and insurance players, there’s plenty of space for young innovators to provide added value to underserved customers. 

What’s your impression about the fintech ecosystem in Croatia and in the CEE region? Do you see any opportunities? 

I have been following the fintech ecosystems in the CEE region for quite some time now, what I am seeing is truly impressive. Be it in Croatia, Poland, Hungary or even Romania, the ecosystems have gained not only in size but also in quality and maturity. 

The region is not just an IT outsourcing hub anymore, the local entrepreneurs are extremely talented and they are developing real innovation. In every segment, we see fintech products and services that can compete on the European market, or even on the World stage. Local regulators are becoming better at understanding technological aspects, larger pool of VC funds are pouring in the region, fintech associations are playing a more active role and we see great conferences, like Money Motion, which is showcasing how the CEE is becoming a key fintech hub in Europe. 

What is the Fintech Ecosystem in Luxembourg and what is the role of the LHoFT? 

Luxembourg has around 300 fintechs, divided in 4 major segments: payment, fundtech, regtech and blockchain. We federate this industry but our mission is much broader. 

As a public-private partnership, the LHoFT foundation’s mission is to foster innovation in the financial industry. We act as the main innovation platform that brings together the fintechs, the finance institutions, the investors and the various stakeholders. We currently incubate around 90 fintechs and have more than 210 fintechs members, scattered across the World, that we connect with the finance industry. We also run multiple acceleration programs, focusing mainly on GreenFintech, FundTech and Impact Finance.

As one of the most important financial centers in the world, Luxembourg is very attractive for fintechs that are looking to provide their services to banks, funds and insurance institutions. We estimate that over 80% of our ecosystem is B2B and over 90% of it is composed of international fintechs setting up their European Headquarters in Luxembourg.

How do VC funds currently perceive fintech? Are they less inclined to invest compared to previous years?

In 2024, we had a decline in the number of funding deals worldwide, but mainly due to the economic cycle and change in monetary policies. 

However, we see a huge interest from European VCs to invest in Fintechs. At the LHoFT, we incubate 5 VCs that are investing in the fintech sector. We see an increase in dealflows but also bigger ticket sizes today, showing maturity of the funds and potential consolidation in the market. Beyond the VC World, we are also starting to see higher interest from Corporate Venture Funds and Family Offices to invest in fintechs. 

There’s such a strong need to transform the traditional finance system, that the business potential is colossal. And that, the investors understand.

What are the next big things in fintech? Which trends should we keep an eye on?

Everybody is talking about AI today. Yes, it’s booming but in the short term, I believe there’s still a lot of room to improve traditional finance with fintech solutions like regtech, lending, payment and obviously blockchain. 

In the long run, I am still very bullish on blockchain technology and the huge potential for digital assets. I hope that in a few years, with the right regulation in place, the financial industry will become decentralized. We will become our own bank, owning our own digital wallets, earning and exchanging various assets under multiple forms. Finance will finally flow, like water. 

How will artificial intelligence transform the fintech industry in the next 5–10 years?

AI will have a tremendous impact not just on fintech: it will change the landscape of the financial industry as a whole. First, fintechs will need to have AI at their core, which means adapt their services and their business models accordingly, otherwise they will disappear. AI will eat traditional SaaS platforms for breakfast. 

Second, with the development and democratization of AI Agents, the financial institutions will have to adapt considerably how they reach, serve and interact with their customers. How do you differentiate yourself when you interact with a machine? What makes your bank’s AI agent more convincing than the one next door, to the AI agent of your client? 

As we’ve witnessed the creation of Neo Banks competing with the traditional ones, we will see the making of “AI Banks” shaking the industry by providing services that we might have never thought of yet. Add blockchain and digital assets in the equation, those will be fascinating times to be alive. 

What would be your key advice for fintech founders looking to scale their startup in Europe?

My advice would be to use what I call national “facilitators”. Those facilitators can be fintech associations, incubators/accelerators, technology integrators and public/private institutions. As said earlier, there’s a great industry and political will to help fintechs scale across Europe. Today, most EU incubators and associations are working hand in hand to facilitate cross border funding, scaling and softlanding. 

My last advice would be to reach out to the LHoFT in case they wish to scale in Western Europe, we can help them set up, connect with clients, investors and any relevant stakeholder. We are here to help.

 

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🇭🇷 Original Version in Croatian via Netokracija.