The growing development of Fintech and related services: we are in an era of financial innovation

Financial intermediaries' clients are evolving in terms of the expectations and needs they express. Accustomed to a simplified user experience in other areas, where almost any operation can be carried out with just one click, they now demand the same level of usability in financial services as well. New technologies, such as Generative AI or new channels such as social networks, are profoundly redefining how users search for content and information. In this scenario, financial institutions are called upon to innovate, offering more tailored services with emerging technologies, while also taking into account the operational and financial risks that may arise. At the same time, these tools make it possible to have a positive impact on sustainability challenges. In this context, Italian start-ups play a dual role: on the one hand, they are new players able to offer more personalised and attractive solutions for customers; on the other, in most cases, they act as strategic partners for established financial intermediaries.

The variety of services provided by Fintech and Insurtech

Today’s financial services landscape is a constantly evolving ecosystem, characterised by a growing variety of customer contact points and the entry of start-ups that can quickly seize the opportunities offered by new technologies. The Banking-as-a-Service (BaaS) model has introduced a true modularisation of the offer: external operators, including non-financial ones, can integrate banking services by using the licence and infrastructure of an authorised partner. In this way, new players specialising in specific aspects of the value chain, such as onboarding, KYC, and credit scoring, have emerged. At the same time, the digital platform paradigm is gaining ground, in which start-ups use credit institutions’ online channels as a distribution lever, offering services that are not always strictly financial in nature. This integration gives rise to a hybrid ecosystem, where the customer can access diversified solutions directly through the banking institution’s interface. The result is enhanced customer value, faster innovation and more efficient service delivery.

Start-ups as drivers of innovation in the sector

A careful observer of all these transformations is Professor Laura Grassi, Professor of Investment Banking and Finance Lab courses at Politecnico di Milano, Director of the Evening Executive MBA at POLIMI GSoM and Head of the Fintech and Insurtech Observatory. Analysing the Italian context, Professor Grassi has underlined the role of start-ups as engines of innovation. “Their ability to develop advanced technological solutions and introduce new business models – she explains – is helping to modernise the entire industry, responding to the new needs of the market and consumers.” The professor also emphasises the importance of legislative and institutional recognition, which aims to promote the growth of these entities, confirming their strategic potential in the evolution of the financial ecosystem. At European level, measures such as the DORA regulation, which aims to strengthen the digital operational resilience of financial institutions, and the FIDA proposal, which aims to create a harmonised framework for accessing and sharing financial data, will have a significant impact on the sector. “It is essential to fully understand the implications of these new regulations to enhance the role of all the actors involved and ensure the sustainable and competitive development of the Fintech & Insurtech world.”

Italian start-ups are struggling to raise funding…

The data collected by the Fintech & Insurtech Observatory of Politecnico di Milano show us that as of 2024, there are 596 innovative Fintech & Insurtech companies which were founded in 2009 and are still active. During the last year, this sector has been able to raise a total of 250 million euros in funding, a figure which is up 44% compared to 2023, but in line with a trend of reduction and greater investor caution which has also been observed internationally (in 2022, funding had been almost 1 billion euros). “One aspect that raises some thoughts – comments Professor Grassi – is the size of the rounds in Italy. Over 50% of companies are looking for amounts of less than 2 million euros of funding. This is a sign of widespread difficulty in accessing funding, but also of a willingness sometimes to act on a smaller scale.”

...but they also show many signs of growth

For this reason, as Director of POLIMI Graduate School of Management’s Evening Executive MBA, Professor Grassi keeps a very close eye on start-ups, which – despite the challenges – illustrate a healthy sector: “Overall, the future still looks bright. For the second year in a row, start-up revenues are increasing, a signal of organic growth for the entire ecosystem. Profitability is also showing improvements, with 44% of start-ups at break-even. This robustness comes with a pragmatic approach to resource management, focusing on operational efficiency and strategic investments. The liveliness of the context is also confirmed by the employment front, with 76% of start-ups hiring, mainly to strengthen research and development, sales and marketing. This buzz testifies not only to the ability to innovate, but also to the desire to consolidate key positions and skills within a constantly evolving market”.

The Evening Executive MBA looks at the vitality of start-ups

The vitality and innovative capacity of start-ups was also a source of inspiration for the Evening Executive MBA, which was redesigned with the aim of training managers capable of transplanting innovation within companies. The possibility of customising courses to focus on individual topics or specific sectors and the ability to bring the creative mentality typical of start-ups into more traditional contexts are just some of the features of this training programme that puts entrepreneurship at the forefront.