Fast-Forwarding Fintech in Central and Eastern Europe

4 min read
22 Sep 2023

ith fifteen years’ experience in the financial sector, Dawid Galus is well placed to understand the challenges faced by fintech startups. As manager of Santander Bank Polska’s Digital Innovation Office, he’s responsible for coordinating collaborations with startups as well as representing the bank in the AccelUP Acceleration Program. He’s also accredited by the Polish Bank Association to evaluate fintech applications for EU subsidies.

With some 270 startups, Poland is the largest fintech hub in CEE, and the sector is an important driver of the economy. In 2020 alone, the country saw a rise of almost seventy percent in VC funding across the board, with over $50 million going to fintechs. 

Unlike in some ecosystems that experience fierce competition between startups and incumbents, in Poland the established financial institutions play a key role in developing the sector. “It simply wouldn’t be possible without a well-developed system of financing as part of acceleration programs that promote cooperation with mature financial institutions,” says Dawid. “From the technological perspective, fintech startups are well prepared to offer their products on the market, but many struggle to navigate market realities, so they need support with pricing models and valuation of their solution when negotiating with potential customers.” 

Collaboration with a mature corporate partner can also slash time to market and smooth the way when developing solutions for certain challenges specific to the financial services and products market. In the case of crowdfunding platforms, for example, the involvement of an institution like Santander Brokerage Poland helps startups to comply with the requirements of the Polish Financial Supervision Authority (PFSA), without which they wouldn’t be able to operate.    

In other areas, legal, technological and market conditions simply make it difficult for startups to compete with established institutions, so it’s important to be aware of this. For example, when it comes to deferred payment services, fintechs dominate. By contrast, incumbents hold sway over loans and credits, making it much harder to disrupt the market. “Before launching a product,” says Dawid, “it’s vital for startups to analyze the area they intend to operate in and judge whether they can compete against established financial institutions or whether the best approach would be to seek a partnership.”

Establishing this kind of commercial collaboration with fintechs is central to Santander’s modus operandi, and the bank has created a tailor-made process for startups undergoing legal and technology review to help them achieve compliance. It also provides infrastructure to test and refine IT architecture and determine whether solutions can be integrated into the bank’s systems. This valuable experience stands startups in good stead when they go on to collaborate with other companies. 

At the proof-of-concept stage, the bank works closely with fintechs to ensure MVPs are as close to the final product as possible, which helps accelerate commercial implementation and joint revenue generation. There are no hard-and-fast requirements for collaboration, but ideally the bank seeks startups that have a product or service at the late MVP stage and paying customers. 

We see fintechs as fully fledged participants in the service and financial products market. Collaborations are an opportunity to improve the products and services we offer our customers and leverage new technologies.

As well as benefiting from test environments and support, startups working with AI and machine learning in particular get valuable access to anonymized documents to train algorithms that can have cross-sectoral applications for fintech, insurtech, telecoms and more. One recent successful collaboration was with deeptech startup Alphamoon, whose solution uses machine learning to automate document processing and classification. During development and implementation, Santander provided authentic data for AI training and validation, support for beta testing and feedback from business users, adaptation to the security standards of PFSA-regulated institutions, and promotional activities to help scale sales. As proof of its faith in Alphamoon, the bank became its first customer and now uses the tech to automate classification of customer complaints. 

“We see fintechs as fully fledged participants in the service and financial products market,” says Dawid. “These collaborations are an opportunity to improve our products and services and leverage new technologies, like those based on blockchain, which would simply be unprofitable for the bank to build from scratch. So we all benefit.”

Most important tips for startups:

Research your target market well.
Finance is a complex and highly regulated sector. Before developing a product or service, you need to know whether you can compete with the incumbents or whether you’d be better off partnering with them. 

See incumbents as potential partners and customers rather than the competition.
That way, everyone stands to win. 

Take advantage of corporate collaborations to test your solution.
There’s no better test environment than a mature institution that’s representative of your target customer base. Plus, securing an incumbent as your first customer helps to establish market confidence in your solution.