On the 2017 Paris FinTech Forum and the French FinTech Scene

Last January, I attended the inaugural Paris Fintech Forum, a one-day affair that brought together more than 600 attendees. Despite the name, this is really an international FinTech event. Sessions were held in a combination of French and English (depending on the preferences of the speakers) and all sessions – helpfully – were translated simultaneously in seamless fashion. Eighty FinTech startups from around Europe presented.

Success of the initial, well-run Forum has led to another, and to an expansion of the program. The second annual Paris Fintech Forum, to be held on January 25^th and 26^th, 2017, will bring together up to 1,200 participants each day at Palais Brongniart in Paris (former location of the French bourse). One hundred twenty startups will be invited to speak, either in pitch sessions or on a panel.

Themes to be explored include:

• Cooperation versus competition
• InsurTech: potential and issues in Europe?
• Payments: What comes next?
• Robo advisors and wealth management
• Blockchain’s future
• Neo banks vs. market reality
• SME finance: gold mine for Fintechs or an illusion?
• FinTech in Europe: Brexit’s impacts
• Transfers & remittance: the new players
• Emerging FinTech markets (Africa, India, …)
• Regulation in Europe: Path for disruption?
• PSD2: path for real disruption?
• What could we learn from other disrupted markets?
• How to promote the development of major European-level players?
• The place of France in the development of new digital finance services
• Alternative business models for new financial services players
• Mobile banking 3.0: media buzz or short term reality

You can register here. A 50% ultra-early-bird discount is available through September 30. The 2016 Forum sold out three weeks prior to the event.

Laurent Nizri is the Founder of the Paris Fintech Forum (and its parent company Alteir Event), CEO of Alteir Consulting, and Vice President of Acsel, l’association de l’économie numérique.

Q.   Laurent, what can people expect at the January Forum?

A.   Last year – I’m sure you heard me say this onstage 10,000 times – our theme was coopetition. We were the first to say, in early 2015, that we would do an event on coopetition. Everyone else was promoting an artificial war between FinTechs and bigger firms. Now, everyone agrees on our coopetition view.

This year, we will focus more on maturity. Buzz is done. We are on the path to maturity. This means more structure, better process, to hire good people, and to develop internationally but on a real foundation. And also to review some commercial models. Look at N26 or Revolut. In the beginning everything was free, but now you notice more lines in the contracts. When you have more customers, issues follow. So maturity is coming, bringing more difficulty but also more potential.

Last but not least, it comes with responsibility to the rest of the ecosystem. When you are five years old and you do a bad thing, you can say, “I’m sorry, I didn’t know.” But when you are 16, it is not the same. If you take that image, most FinTechs are not adults yet, so we cannot claim them to be responsible for everything. Moreover, if we speak of volumes, the biggest frauds today come from the big institutions, not from FinTechs. But, as they begin to grow, have a bit more customers, a bit larger footprint, there is more risk. They are also a bit more experienced, so they can no longer say, “We did not know there was a law for that, we are new in that market.” There is a middle way. It is time for more responsibility and that may be what we discuss, as well as what comes with that.

Also, we will discuss international expansion, providing services to SMBs, and, of course, wealth management. Don’t forget, we will be in a very symbolic venue: the French stock exchange building.

We have many subjects but this year we have two days and many stages so we can go more in depth. This year, we have seven rooms. The largest is double the size of the main room last year. It will have 600 seats. It’s like a big, majestic theatre. We also have the FinTech pitch stage, with a capacity of 200 seats, and a small auditorium of 100 seats where we will have a dedicated stage for specific subjects like one full day on RegTech and regulations, and one full day on emerging markets. Other, smaller stages are dedicated to our partners on topics important to them like payments, AI, robo-advisors, and fraud. These will seat fewer people but will encourage more in-depth discussion animated by a partner.

Q.   What are your key differentiating points as an event?

A.   In our DNA we have some key things. For instance, we always try to mix on the same stage CEOs of FinTechs and CEOs of big corporations that work with them or sometime buy them out. We will again promote cooperation. We are not here to develop a war between FinTechs and big corps. It is coopetition and cooperation.

Another key factor is that we really focus on the content. In my event, you come to listen and exchange with the people on stage, not just for the networking. We really focus on content. We work hard to promote real discussion on stage, not the one you’ve already heard 10 times.

Q.   How are startups selected to present?

A.   I have already reached out proactively to roughly 20 FinTech startups that I know we would like to see present. We are also inviting startups from around the world – they could be from Europe, Asia, Africa, the States – ­to complete an application form that they can find on our website. This will tell us who you are, what you are doing, the stage you’ve reached, and so on. I will then make selections to ensure diversity by country, by type of business, by maturity, etc. Last year we tried to have almost only companies that already had customers and had raised at least €1M. But this year, added to that main category, we’ll do a specific session on very early stage. So anyone can apply. We’ll choose a total of around 100 additional to participate.

If they are selected, they will be able to pitch onstage. There is a dedicated stage for pitches in a room that holds 200 people. I will also ask some to participate in a panel on the main stage. I don’t want people thinking that the pitch is for the smaller firms and the panels are for the bigger firms.

The pitch is designed to help create awareness. The people in that room will be bankers, journalists, VCs, etc. Last year, almost 60% of our attendees had the title of CEO or executive committee member, or VP, or board director. So if you are selected to pitch, it’s like 200 commercial/partnership meetings at once!

I will also propose to most of them (60 to 80) that they place a booth or a table in the exhibition hall as a meeting point for discussion with anyone attending the event. It won’t be the same startups exhibiting on day one and day two. One more reason to block the two days in your calendar!

Q.   Are there any startups in particular that you are looking forward to seeing?

A.   It is too soon to say for this year, but we are proud of each and every FinTech that we presented last year. If you look at the list, which includes Revolut, N26, and Monzo, and so on, and you look at the news they made in the six months after, I think we can be proud of our choice.

All FinTechs, whoever they are, wherever they are, where they are from, they are trying to transform the financial industry. Some will fail, of course, but what they are doing now is great. And it is a real privilege to have the chance to work with them closely.

Q.   What else should interested startups know?

A.   Nobody pays to be on stage. It is free for every speaker. Their main difficulty is being selected. If they are selected, they will have great chances to get a booth (depending on availability) – at other events you would have to pay for this – and they will have access for free to the Forum. And they will be in our book, which we distribute broadly in the first semester of 2017.

Q.   Let me ask you a few questions about France in particular. France is home to several of the world’s largest financial services firms. Which are most successfully bringing innovation to market?

A.   It is difficult for me to say because I don’t want to be accused of favoring my partners, but I would say that BPCE is doing interesting things with the acquisition of Fidor. As their CEO, Francois Perol, said at last year’s Forum, their innovation efforts are like an English garden – a bit messy if you look too closely, but nonetheless creative and full of potential.

Q.   Which firm is doing the most to support the French FinTech community?

A.   In France, it is Credit Mutuel Arkea. Digital is very important, not to say vital, to their strategy.

Q.   What is the funding environment like currently in France? Is seed capital available? Can A and B rounds be raised domestically?

A.   My understanding is that France still has the usual problem. For FinTech and for other startups, we are very good for seed investments, because the laws and the tax code support it. It is very easy to give your money when you are a wealthy angel because you can deduct 50% from your taxes. With ten people giving €50,000 each, you can easily raise €500,000. We also have some very good seed funds. But after, when you want to go for a round of €10 million or €25 million, that is still a problem. Not to mention that to my point of view, to build B2C financial services, for instance, €10 million to €25 million is far from enough.

Q.   Who are the go-to VCs for FinTech in France?

A.   I was asked just this question very recently. It is very difficult to say, because I know all of them, and if I say one, the other will ask why I did not mention him. Let’s just say we have a bunch of very good VCs. The well-known, of course, will be on my stage. Philippe Collombel of Partech Ventures is one of them.

Since last year, there have been a few new serious FinTech funds coming out. For example, you have NewAlpha, Truffle Capital, or BlackFin. But Partech Ventures is still the biggest one for now.

Q.   At this year’s Forum in January, Philippe Collombel suggested that French regulators need to be more visible on the world FinTech stage because their leadership is required. He believes regulators across Europe put their domestic retail banking champions at risk of disruption by being too conservative. Are there any signs this will change?

A.   This year we’ve seen many new initiatives by the different authorities. The FinTech Forum – not my FinTech Forum but an initiative by the Banque de France and AMF, which is the Autorité des Marchés Financiers. They are trying to help all the new entrants coming to the market understand all of the key rules and what they have to do. It like marketing of the regulations. It is a quite good move.

They take a different position than regulators in the UK. Many people say that we should follow the UK and do a regulatory sandbox. The position of the French regulator is to say no, we don’t need a sandbox. We don’t want to open a black hole. In France, historically, we always view this kind of thing with a very responsible eye. By the way, during the financial crisis, we did not have a bank recapitalized by the state. Our banks were solid. So we are very tough on regulations sometime, but when there are issues it is quite good for that. What the Banque de France and so on are saying is that we don’t need a sandbox, but we need to adapt what we ask to the maturity and the real risk undertaken. It is more risk-based analytics.

If you want to do a comparison, remember in 2008 when 3D Secure arrived in payments. In the beginning, French authorities were saying everyone has to use this protocol. That is the law. But then they saw merchants lost too many customers. So they then said, let’s do a risk-based analysis. Support 3D Secure when the amount is above a certain amount, or the customer is new, etc.

It’s a bit the same kind of thinking now. For instance, let’s take into account the “backup security” of a new guy doing a FinTech in a field where he has to use the Visa rails and the bank behind him is quite secure. Because at the end of the day, Visa and the bank are already doing the due diligence. You don’t have to ask for exactly the same kind of stuff that you ask of someone taking your money to invest without any real control by any partner. So you will adapt the regulations that you ask to the size of the market and to the guy who is asking and to the kind of business he is in. This is more case-to-case, but I find it interesting.

In France, we love making rules. We have books of rules. For almost – perhaps not all – but for almost all financial activities – call it FinTech if it is financial activity with a bit of technology – we already have a set of rules. In many countries, it’s a gray area, so you may have to say let’s do a sandbox, let’s try a test. But in France, you want to do something and there is a law for that from 30 years ago. We had Minitel in 1986, so this is not new. Again, perhaps a bit tougher than in economic areas where it would be “gray”, but that gives to FinTech visibility/certainty.

For many things, if you are not educated in finance you may think it is brand new and there is no law, but in France there is already a law. The problem is to find it, because we have so many texts.

That is what they are trying to do with this Forum: to help people find their way through this forest.

Q.   Brexit would seem to open up a large opportunity for France to gain ground as a FinTech hub, possibly even attracting FinTech firms from London. Will Brexit be a topic?

A.   I would not like to treat it as Brexit. I would like to treat it as what is FinTech in Europe in 2017. Brexit is there, but I am European before everything. I am not happy about Brexit. I don’t want to win something just because my former partners can’t fight a battle; I want my country to be a good place for FinTech development, whatever the others are doing. So we will discuss it, of course, the different ecosystems, but I will try to bring representatives to the stage from France, UK, Germany, to discuss who is doing what to advance FinTech. The UK still has good weapons.

Of course, Brexit will be on the lips of everybody so we will have to discuss it, but I’m not sure it will be the name of a session. It will be part of the discussion when we speak of what is European FinTech now.

Q.   In addition to the purchase of Fidor, what are some of the notable happenings in the European Fintech community thus far in 2016?

A.   Speaking just of our participants from last January, several have raised money. Off the top of my head, Afrimarket raised a lot of money. AMfine raised money. Linxo raised a little bit of money. Creancio raised several million. Cringle is German, but they are another FinTech Forum participant that just raised money. N26, another German FinTech, raised $40 million.

Finsquare was acquired by Lendix, which itself raised $13.5 million. France Barter raised a small amount. GoCardless also raises a good amount; they are based in the UK. Revolut, also in London, raised £15 million. We could continue like this; there has been a lot of activity.

And not just fundraising. Many of our participants have been busy with commercial activity so they have very nice news flow.

Q.   FinTech is a very broad (and somewhat ill-defined) category. In which sectors is the French ecosystem particularly strong?

A.   Definitely payments. No question about it. The world-wide leaders in payments already come from France. We have very good FinTechs in payments.

I think we will soon see interesting stuff in robo advisors. All that is mathematics and we are quite good in maths. Usually foreign companies love our engineers.

Crowdlending we have but honestly I think it’s a specialized market that depends a lot on local regulations. We have quite good ones but not more than some other markets, I think.

Where we have good things coming soon, I think, is in anything doing with personal finance management. We have a bunch of companies on good tracks. (Linxo, Bankin’, Budgea, etc.)

Two other things. A good thing and a bad thing. The light banking – we are not good. We don’t have (for now) real live competitor to Monzo or N26 and so on. We have a good one in transfer and foreign exchange for SME’s but it isn’t based in Paris. It’s Kantox.

What I think would be interesting to see soon is in two sectors: in wealth management and savings. France historically is a country with a lot of savings. Due to the very-low-rate environment, people are having to look for a new solution. When you have to look for a new solution it is good for innovation. As we have a good history in wealth management and in savings, we can imagine that we will soon see nice things from FinTechs.

Another area where we don’t have much in right now, but which I think we have good raw material for, is InsurTech. AXA is a worldwide leader and AXA in France is very good with the ecosystem and the startups. So we could imagine that it is easy to go meet AXA Labs and AXA people while you are in France and they have what it takes to support this kind of stuff. Right now we aren’t big in InsurTech, but I think it could come.

Q.   Is this one of the themes you’ll explore in January?

A.   Definitely, but let’s not forget that one of the big FinTech themes, as last year, will be the less sexy one, which is the service to finance. You have two kinds of FinTechs. You have the ones trying to reinvent the way you work with end customers. That’s nice, that’s sexy for the newspaper, but that’s complex to do. And then, you have the ones selling services to banks, to insurance companies – this is the bigger market. In France, we have the good habit of cohabitation and cooperation between the small firms and the big firms. For that, we have quite a lot of FinTechs.

Q.   Is the typical French FinTech entrepreneur thinking domestic market or world domination? Do French FinTech founders dream big enough?

A.   You don’t find any European entrepreneurs thinking large enough. We are by many ways a collection of countries. Even in the UK, you can’t imagine the number of firms who say we just want to serve the UK market, we don’t need to come to the Paris FinTech Forum. They don’t have a view on Europe. They speak English, we speak French, Germans speak German, blah, blah, blah. It’s not just French. Yes, I think the French don’t think big enough internationally, but honestly, they are much better than some others. The European people don’t think enough about global. We should at least – all of us, when we begin a business – think European.

That is an issue for all our FinTechs.

Q.   The Money 2020 and Finovate conferences have recently been sold. Are you accepting offers?

A.   Hahaha! I just began, let me do my job!

We are only at the beginning of what we want to do. We don’t want to do only an event; we want to have a family. January’s event will be like a big New Year’s family meeting.

I am very happy with the response we have had. I have many email exchanges with entrepreneurs I don’t know who attended the event in January and tell me they met someone there and have done business. It was not only a place where you come to learn, it was interaction, it was communication, it was awareness, it was business deals.

What I would like to do is transform a once-per-year event into something with continuous participation. I am still working on the recipe. That’s the objective. Year round, how do we work better together?

Last but not least, the event is a startup like the FinTechs I invite onstage. We are walking the exact same way. It is not the time to think about selling. We are just building an adventure.

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