In 2023, funding for European fintech fell from $24bn the year prior to $8.4bn — a 65% drop in total funding for the sector.
While things bounced back in 2024 with European fintech startups raising a slightly healthier $8.8bn, achieving growth in the highly regulated sector is still tough.
In our latest Sifted Talks, fintech experts discussed how to build and maintain trust while scaling. They explored the security practices fintechs can adopt to grow responsibly, how to balance innovation with robust guardrails and the role automation can play in driving both compliance and efficiency.
Our panellists were:
- Sadra Hosseini, CEO of Ryft, an embedded payments solutions platform
- Marsel Fazilov, risk and compliance specialist at Vanta, a compliance and security platform
- Conrad Ford, chief product and strategy officer at Allica Bank, a fintech focused on small- and medium-sized businesses (SMEs), and the winner of Sifted’s ranking of Europe’s 250 fastest-growing startups
- Zeynep Yavuz, partner at VC firm General Catalyst, with a focus on fintech
Here are the key takeaways from the discussion:
1/ Holding the right licences is the bare minimum
In fintech, where companies manage sensitive financial data and consumer funds, trust is everything. Regulations like the Payment Services Directive (PSD2), the European regulation for electronic payment services, and the Digital Operational Resilience Act (DORA), an EU regulation that requires financial entities to improve their digital operational resilience, aim to reinforce that trust — but how can startups go further?
Hosseini said trust starts with meeting regulatory expectations. “Holding an FCA licence, an EU licence and being PCI Level 1 compliant are the bare minimum,” he said.
Ford added that at a macro level, some trust signals are hard to fake, so it’s essential that you get them right. In Allica’s SME-focused world, LinkedIn is one of them.
“Anyone can stick a badge on a website and say they’ve got five stars. But if you click through on Trustpilot, it’s very hard to falsify at a certain scale. Those are the things that really matter.” — Conrad Ford, Allica Bank
2/ Start with a partner, then build your own infrastructure
From an investor perspective, Yavuz said the way they evaluate trust is twofold. First, communication — how transparent are you in explaining your pricing and value proposition, and are you avoiding jargon?
The second, infrastructure. Are you running on a banking-as-a-service provider, or do you have your own licence? And if you do have your own licence, how localised are you in the countries you operate in?
For Ford, to build a major new challenger in fintech, you need to build your own infrastructure and secure your own licensing. That said, he added that Monzo and Revolut, when launching a new product or channel, often start with a partner — then, over time, replace that partner once the channel is proven.
“When you’re founding a financial services startup, sometimes it makes sense to take the easy route on some fronts so you can focus on winning others. What Monzo did brilliantly in its early days was build virality — word of mouth.” — Conrad Ford, Allica Bank
3/ Retention matters more than acquisition in a crisis
If a B2C company loses the trust of its clients, can that trust realistically be rebuilt?
Ford said there are many examples where businesses do so, but the honest answer is: it depends. He added: the actions taken in the immediate aftermath of a crisis are critical. “If you’re facing that situation, you really do need experts in crisis,” he said.
Yavuz agreed: “I wouldn’t say it’s easy, but it can be done.” She emphasised that retention matters more than acquisition after a crisis. Keeping customer acquisition costs under control is also essential for driving long-term growth.
“You need to take a pause, put new measures in place to regain the trust of your existing customers and only then go back to market. You also need investors who are aligned with you, because if they’re pushing for growth at all costs, that may not be possible.” — Zeynep Yavuz, General Catalyst
4/ There still needs to be a human touch
Hosseini cautioned that customer trust may begin to erode over the next five to 10 years as automation becomes more widespread.
“People are still buying from people, and they still want that relationship,” he said. “No matter how much automation you add in, there still needs to be that human touch.”
While maintaining strong relationships and vision is critical, Fazilov said scaling operations also requires adapting quickly to market demands. Regulatory red lines are unavoidable, but once those boxes are ticked, look to new sources of inspiration.
“Opportunities will be based on industry best practice, or what your competitors are doing. Can you adapt to speed?” — Marsel Fazilov, Vanta
5/ A bit of risk is good
What are the red flags for investors?
On the infrastructure side, Yavuz said investors look at metrics like conversion rates. If those are low, it might point to a marketing issue — or, more likely, an over-reliance on manual processes. Brand trust is also important. Once a company loses it, the impact is felt first in the new customer funnel before it starts affecting retention.
Ford said a bit of risk is good: “If there aren’t a few fires smouldering in your business, you’re not being ambitious enough. If there are no issues, you’re not pushing hard enough.”
“Just ask ‘why’ until you get to the person who says, ‘Well, we did it like this 10 years ago because of that system there.’ Asking ‘why’ is a simple question, but it can get you a lot of answers.” — Sadra Hosseini, Ryft
Like this and want more? Watch the full Sifted Talks here:
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