Fintech is a sector in which Luxembourg has strongly positioned itself in recent years. Mark Tluszcz, CEO of Mangrove Capital Partners and Chairman of Wix, shared his thoughts on this industry with us.
(Featured Image: Mark Tluszcz, CEO of Mangrove Capital Partners and Chairman of Wix / Image Credit: Serge Afanou)
The problem with fintech is as follows: would you trust a little-known startup with your money? The answer is probably no. We aren’t talking about “likes”, we’re talking about your personal savings. Therefore, the likelihood that a fintech startup would be more successful than a bank is virtually non-existent.
At Mangrove, we have not made a single investment in this area. I have been extremely – and overtly – negative on this subject because there is still no success in this area. The first big fintech hit was PayPal and it is already almost 20 years old. The great fintech initiative that followed was Internet Banking and it was the banks themselves that led it. And since then, there has been little in terms of real success. When I speak of success I mean startups sold.
When you try to figure out why, the answer is very simple: it is all about brand. As much as I hate banks, at least I know that they will be there tomorrow with my money in my account. On the other hand, I can’t say the same when it comes to a startup. I think the next big innovation in the fintech area will not come from a startup, but rather from a GAFA like Facebook or Google that already has the mass of users and already has strong brand recognition. We’re going to say, “Well, I trust Google with all my data, so why not put a little bit of money in there.” Big fintech innovation will definitely not come from a startup.
Luxembourg has long been in this field because there are banks here, but for the moment there are no real successes, and this is true for other countries as well. London has strongly positioned itself in this area too. I wrote an article that was published in the Financial Times a year ago, in which I was very negative on the subject. The English venture capital world did not appreciate it very much! We’ll see if it’s reality; in any case this is my perception.