Amsterdam’s FinTech scene is booming
When Money 20/20, the world’s most important FinTech conference, chose Amsterdam for its European edition in summer 2018, it confirmed the prominence of the city’s FinTech ecosystem. An estimated number of 450 companies are currently active in the Amsterdam Area, and the number is ever-increasing – bringing plenty of new jobs and opportunities to the city. Recent international arrivals include Currencycloud, which is streamlining cross-border business payments, and leading European digital money transfer service Azimo.
“Amsterdam has a growing and vibrant FinTech scene, with some big names such as Adyen, Ohpen and Bux already established here,” says Todd Latham, CMO and head of product at Currencycloud, “and a strong network of existing and potential banking partners.” Michael Kent, CEO at Azimo, agrees: “Amsterdam really forms the heart of the action when it comes to continental European opportunity and it has a thriving FinTech scene.”
One of the city’s most important sectors
The fact that Startupbootcamp, an important actor in Amsterdam’s startup world, now offers its own FinTech & cybersecurity track is a testament to the city’s rapidly expanding FinTech sector. “Amsterdam’s FinTech ecosystem, in comparison to large European FinTech hubs such as London and Frankfurt, is growing at a rapid pace,” says Startupbootcamp’s managing director Michael Dooijes, citing the support its programme has had from corporate and network partners such as Rabobank, ING, ABN AMRO, Achmea, Nationale Nederlanden and PwC.
Dooijes cannot stress the importance of the sector enough: “Both FinTech and CyberSecurity are the hottest areas of startup innovation and investor focus because they are at the heart of huge industries, which will significantly transform in the coming years. FinTech has been one of the main verticals for Startupbootcamp programmes on an international level for several years.”
Photo: Startup Bootcamp FinTech and CyberSecurity Demo Day
A new FinTech hub for Amsterdam Zuidoost
Sometimes the FinTech sectors’ big players can be accused of resting on their laurels, or not evolving quickly enough to keep up with competitors or the needs of their customers. But in Amsterdam, big banks and FinTech firms are regularly developing new initiatives: in addition to their partnership with Startupbootcamp, ING are planning to open a FinTech campus at the site of the bank’s new global headquarters in Amsterdam Zuidoost, which will be an “urban hub where businesses, academics and innovators from all sectors can work together in an open and dynamic environment that stimulates creativity and boosts invention.” The bank’s €300 million venture fund also invests in promising FinTech businesses worldwide.
ABN AMRO, on their part, boasts successful FinTech initiatives such as Franx and Moneyou, a digital personal banking service, and there are numerous other spin-offs and FinTech projects across the sector.
Photo: An artist's impression of the new campus
A more diverse and competitive industry
Amsterdam’s FinTech ecosystem – and that of the country as a whole – has been accused of lacking diversity in the past, with big banks and brands monopolising the market. In 2018 its diversity is plain to see, and it also boasts some particular strong points. One of them is in payments: Adyen, the city’s first FinTech unicorn, is an example that comes to mind immediately, and companies such as Mollie and Buckaroo are hot on their heels.
Other FinTech subsectors that are strong in Amsterdam are banking software – with companies such as Backbase, Ophen and Five Degrees going strong – and cybersecurity. An example of a company that is paving the way in the latter subsector is EclecticIQ, a cyber threat analysis firm that has received substantial investment.
World-leading digital infrastructure in Amsterdam
The scene is grounded in a healthy tech and startup ecosystem. In addition, digital infrastructure is a significant factor for FinTech companies and as the home of the largest data transport hub in the world – the Amsterdam Internet Exchange (AMS-IX) – Amsterdam delivers. This guarantees the fastest and best possible transmission and execution of instructions, payments and orders.
Another reason for the European – and Dutch – boom in FinTech is that EU-wide changes in financial regulation allow new FinTech companies to shake things up. “Opportunities arising from regulatory developments in the European market, such as PSD2 and Open Banking, further stimulate the rise of FinTech in Europe as well as in the Netherlands,” says Dooijes.
How regulation helps FinTech businesses in the Netherlands
An important factor for new FinTech businesses is how national regulators deal with innovations that the current set of regulations may not provide for. “New innovation requires a different regulatory view to match the existing laws and regulations,” says Dooijes. To address this issue, the Dutch regulators DNB (the Dutch central bank) and AFM (the financial authority) have launched the ‘InnovationHub’, a joint initiative that provides businesses with support on queries about supervision and regulations relating to innovative financial products and services.
More importantly, the two regulators also operate a regulatory sandbox to enable businesses to roll out their innovative financial products, services or business models. Both the InnovationHub and sandboxes also offer companies the chance for international startups and new businesses to deal with an experienced regulator in English who understands their business model and who is pragmatic about overcoming any issues they might have.
For arrivals from outside the country, the regulators also play an important role – as the companies are applying for licenses, they want to work with an experienced regulator who understands their business model, someone who’s pragmatic, and, last but not least, someone who communicates in English. The Dutch regulators have a good reputation in that regard.
“Our experiences with the DNB have been very positive,” says Latham. “They’re a tier-one regulator, and that’s important to us – we wanted to be regulated properly and effectively. They are keen to know everything about our business, and we’ve had a number of really productive early discussions about Currencycloud, our objectives and how we intend to establish our European hub. When it comes to FinTech innovation, the DNB has been very encouraging and keen to understand more about FinTech and payments companies like us.”
Kent adds: “We feel that the UK has a lot in common with the Netherlands when it comes to regulation. We’ve spoken to the Dutch Central Bank and although they are a tough regulator, they are straightforward and transparent, not unlike the Dutch.”
Amsterdam’s international identity helps businesses
Cultural similarities are another factor that speaks for Amsterdam as a location for international FinTech companies. According to Kent, who has just overseen setting up the Amsterdam office of the UK-based company, “the Dutch have a mercantile view, which is also something they have in common with the English, so there’s a good cultural fit.”
Currencycloud’s Latham has a similar argument: “Amsterdam has a similar appeal to London – it’s a cool city, and people want to live and work here, which is great from a recruitment perspective. On a cultural level, the Dutch and British are also similar, so it’ll be a seamless addition to our UK operations.”