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Ukrainian fintech: emerging business trends




Over 100 fintech companies are currently operating in the Ukrainian market. More than half of the companies (58%) have been founded in the last three years, with 21 startups being created in the past year alone. Experts predict that such growth rates will continue in 2019. These are the findings of research conducted by the Ukrainian Association of Fintech and innovative companies together with the National Bank of Ukraine and Visa.

Among the main reasons for this positive dynamic is the absence of global players in the market, due to the shortcomings of Ukrainian legislation. Furthermore, cleaning up the banking system led to the release of many specialists from the banking sector who are now ready to try their hand in innovative start-ups.

Payment services dominate within the field of Ukrainian fintech companies, having increased in number by 13% over the past year to 38. Also among the leaders are mobile wallets (22), consulting and analytical systems (26) and companies that specialise in various technological and infrastructure solutions for financial business processes (36). Among the specialisations that are new in Ukraine but already popular abroad are insurtech and regtech. At the same time, interest in the blockchain in the country is still low. Last year, only three new companies appeared in this segment, increasing their number to 16.

Most Ukrainian fintech companies today are at the beginning of sales (24%) or business scaling (48%), while only one in five companies is a mature business (19%). A mere 1% are in the process of realising the idea and MVP (7%), which goes against global trends. Among the possible reasons are the underdeveloped support infrastructure for startups and the limited entrepreneurial culture. However that may be, Ukrainian entrepreneurs prefer to enter the market with a ready-made product.

In addition to the need for support in the early stages of development, one of the main problems facing startups is a lack of access to finance. In Ukraine, about 63% of companies operate without attracting funding from investors. In other countries, by contrast, most startups are funded by venture and seed funds and investment companies.

According to research, 43% of Ukrainian fintech companies already work abroad. The most popular market is Europe (72%), followed by the CIS (30%) and the USA (21%). Experts predict that this trend will grow. According to a study, 73% of those who are still working in the domestic market are planning to enter foreign markets in the near future.

In general, fintech companies employ more than 4,000 people. It is interesting to observe that 27% of the managers and owners of such enterprises are women.

The main forecasts made by experts for the development of the fintech industry in the coming year are the following:

• Fintechs in the payment sector will continue to be the engine.

• There will be active access to foreign markets or business expansion abroad.

• The share of digital payments will increase.

• We will see increased cooperation between fintech companies and banks.

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