The Czech FinTech market potential is of up to CZK 15 billion
Prague, 3 December 2018 – In the Czech Republic, the market in FinTech services has the potential to be worth between CZK 6 and 15 billion. Considering the market’s present size, the figure currently stands at CZK 3 to 8 billion. However the existing revenues are much lower. According to estimates, 2017 revenues in the sector were between CZK 400 and 800 million. These are the conclusions of Deloitte’ FinTech in the Czech Republic and in the World study.
“Cross-border FinTech firms have already successfully entered the Czech market. Examples include the Revolut application or the PayPal payment site. The latter is considered one of the first and significant FinTech firms. This year, its market capitalisation exceeded USD 100 billion. However, examples also include successful Czech FinTech firms operating on a global scale, such as Spendee or Twisto,” says David Marek, Deloitte’s Chief Economist.
The strongest FinTech player in Central Europe is Poland, which profits from a relatively sizeable market and the presence of global banks’ regional centres. In terms of the volume of regional investments, the Czech Republic comes second, with more than a quarter (27%) of all investments in CEE FinTech firms was made in the Czech Republic.
“Along with Poland, the Czech Republic is one of the FinTech leaders in Central Europe. The Czech Republic has favourable starting conditions for further development: it has a qualified ICT workforce and a large portion of the population with internet access,” says David Marek.
The majority of FinTech solutions is based on smart phone applications. Therefore, in order for the FinTech market to develop further, their penetration must be accelerated. It currently stands at 55% in the Czech Republic, below the European average (63%). Faster acceptance of FinTech applications is also hindered by expensive mobile data. On the other hand, FinTech is indirectly supported by the massive expansion of contactless payments in the Czech Republic (83% of all card payments are contactless).
“Numerous technology firms focus on the financial sector, the reason being that despite a minor decline in profitability in the last years, the sector’s revenues are attractive, at around CZK 145 billion, and there is sizeable room for improvement in the online service customer experience. In 2017, the FinTech sector in the Czech Republic generated sales of CZK 400 to 800 million. They are still relatively low, however their pace of growth in dozens of percent is significant,” adds Roman Lux, an Assistant Director at Deloitte.
Deloitte’s study shows, from the perspective of their potential in the Czech Republic, that FinTech services will most probably keep developing together with the whole financial market. New solutions development will help to accelerate penetration of financial services in the Czech Republic. So far, local banks have not been very keen on developing FinTech solutions. This may be due to legislative and regulatory measures as well as shareholders’ preferences, for whom the Czech market is highly profitable. Examples of FinTech solutions implemented in the Czech environment include Česká spořitelna’s new internet banking “George” or the multibanking application “Richee” by Banka Creditas.
FinTech is also expanding financial availability among the “unbanked” population – the portion of the population without a bank account. On an EU-wide level, the Czech Republic has the fourth highest proportion of such people – almost a fifth (19%) of its population does not have an account. The greatest number of people without an account is in Romania (42%).
To view the FinTech in the Czech Republic and in the World report, follow this link.