Fintech and Generation Z

These days everyone is talking about millennials but banking and payment providers should be one step ahead - target and build relationships with Generation Z, customers born between 1996 and 2010, who might have developed some preferences, but aren’t loyal to one brand or financial product. Gen Z comprises 32% of the global population of 7.7 billion while Millennials account for a 31.5% share. Soon Generation Z will be getting older and start earning money. As a result, their value will increase and companies will need to engage more and provide rewarding experiences that promote brand loyalty. This generation differs from their older siblings and parents. They have access to different payment service, and they are very much influenced by friends and peers. Also, it is important to mention that ¾ Generation Z use smartphones to pay and shop online.

Armed with the knowledge that makes Generation Z tick is critical for any fintech that plans to target this tech-savvy audience. This is why we have come up with key takeaways that you should pay attention to before getting your hands on Generation Z.

Engaging with Generation Z

Generation Z is aware of technologies and their power. Therefore, they expect companies to provide personalized and ready-to-use products. In recent years, consumption has become a means of self-expression, leading to more personalized products. In turn, Generation Z is more willing to pay extra for products that express their unique identity. But this does not mean that they are not thrifty – they are just ready to pay for the added value.

Also, it is important to create a meaningful dialogue that accepts difference and diversity. Generation Z is actively shaping their identities and they don’t see a problem in changing groups and their beliefs. Companies need to find a way to engage and interact with Generation Z without pressuring them to purchase a product or services. Therefore, this behaviour requires banks and fintechs to adapt their approach and make sure that changes come from continuous interactions. In other words, companies need to reach out to Generation Z, explain and provide advice on all important aspects of payments, including budget, how to make saving and manage credit, and where to invest.

Fast-paced way of living

Z-ers usually do not have much time and their focus shifts fast because of the fast-paced and ever-changing world. It means that banks and fintech need to generate shorter forms of communications, including articles, papers, video, movies, text messages, and calls, etc. Otherwise, they will change their mind and fast-moving trends don’t help much. If companies don’t have a fast-moving cycle, Generation Z will get impatient and more likely get out of the game right away.

The on-the-go generation wants convenience – simple and fast services of authentication, identification, and payments. Good examples are social networks, like Twitter with its 280 symbols or Instagram, which was built around visual content. The same approach must be transmitted to fintech - fintech platforms must be always open, always accessible and have the flexibility to connect different kinds of services.

Price matters

Generation Z is much more sensitive to price and their preferences are changing fast in comparison to other generations. Therefore, it is difficult for businesses to raise brand loyalty and retain the customer base.

There are a handful of trends fintechs and banking players can consider reaching a billion of Gen Z members. For example, the purchasing decision of Z-ers is usually influenced by referrals. Loyalty rewards and other incentive programmes can be helpful, but it isn’t enough. Another important aspect is that Gen Z shoppers are committed to social values and sustainability. If a fintech platform wants to grow a brand base beyond price, it is recommended to work more towards socially responsible and environmental projects and initiatives. To sum up, there are three tactics you can use to tap into Generation Z – price, loyalty, and social responsibility.

Technologically and social media savvy generation

Generation Z is digital natives, because the Internet and social media have always been there for them. Most of them have had smartphones since they were very young and barely speaking. That explains why social media has a huge impact on how Gen Z sees and interacts with the world and technologies. In fact, it is difficult for them to spend even 60 minutes without checking their phone or Facebook. This is a relevant point, when fintechs are looking for ways to interact and influence Gen Z. Social media are the eyes and ears of fintech brands, whereas communications via the Internet and mobile apps, in general, are the tools of focus right now.

Driving innovations

Gen Z was born in a world where innovations and functionality matter. New digital technologies drive the way Gen Z lives. It means very soon their future will be fully automated with cars having autopilots, refrigerators with a food ordering system, smart cities and IA taking over all the industries.

Gen Z was born in a world where innovations and functionality matter. New digital technologies drive the way Gen Z lives. It means very soon their future will be fully automated with cars having autopilots, refrigerators with a food ordering system, smart cities and IA taking over all the industries.

When it comes to means of payments, Gen Z is positive and more willing to follow this evolution and innovation in banking and payment services – smart payments, smart banking, smart apps. Also, another trend is cryptocurrencies. Under the condition that companies educate Gen Z about the use of cryptocurrencies in their everyday life, Gen Z consumers will be more open and willing to use cryptocurrencies as a means of payment. So, the conclusion is that fintechs companies must continuously reimagine the products and services they offer - they must innovate and create new value for customers..

FinTech started its revolution to bring transformative innovation to financial services through the application of new and emerging technologies which address consumer needs. But consumer needs differ from one generation to another. So, the main ability of Fintechs must be adaptivity and flexibility to changes. This is what Advapay offers for Fintechs - our Core Banking and Payment solution can grow along with your business. You can start from basic solution and add functionalities as you need.

Want to know more about core banking and payment platform for your fintech business – contact us!

Fintech after Brexit

Brexit is happening: the UK left the EU on 31 January 2020. It has entered an implementation period which is due to operate until 31 December 2020. During the implementation period, EU law will continue to apply in the UK.

No one knows what Brexit will mean for financial technology companies and European business in general. There are the uncertainties of Brexit - either UK`s or European regulators do not have a clear vision and legislative guidelines for companies.

What does Brexit mean for EEA-authorised companies:

For EEA-licensed companies, passporting allows to conduct business within other EEA states. Their passporting to provide services in the UK will continue during the implementation period. After that period EEA-authorised companies (PI and EMI) will not be able to continue their services with existing passporting in the UK and need to establish an authorised or registered UK subsidiary to provide services in the UK. EEA firms may need to have authorisation in the UK to continue to access the UK market. Similarly, EEA investment funds may also need to seek UK recognition to continue to market in the UK. FCA, the UK`s regulator will inform on further steps.

London and the UK will continue to be a leading player on the global financial stage after Brexit, according to data, provided by the Freedom of Information request (FOI) by Bovill. To this date more than 1,400 EU-based companies have applied for permission to operate in the UK after Brexit. According to over 1,000 of these firms are planning to establish their first UK office.

What does Brexit mean for UK-authorised companies:

If the UK-authorised firm wants to provide financial services in an EEA state, it can apply for a passporting to do this. The company may also need a domestic authorisation in the EEA state. The UK-authorised firm focusing on providing financial services in an EEA state, may set up a branch in an EEA state (an ‘establishment’ or ‘branch’ passport) or to provide cross-border services or advice (a ‘services’ passport).

UK-based fintech companies are taking steps to prepare for the worst-case scenario of Brexit and continuing securing licenses for the EEA region. Many companies are already received their EEA-based licenses and some of them use transition period time to do these steps.

The UK fintech vs European fintech in figures:

The UK holds the leading position in investments into financial technology startups, drawing in over $4.9bn last year. Comparing with European fintechs, which raised $8.5bn., the UK contributed to over half of all the continent’s investment in this space, according to new research by Innovate Finance. Seven of the 10 biggest European fintech raises last year were by British companies.

The UK showed a 38% boost in fintech investments since last year. Its closest European peer was Germany, which raked in $1.3bn, followed by Sweden with $778m.

Fintech market wrap-up, crypto-companies

1) Finally, Crypto-companies and cryptocurrency exchanges are considered “obliged entities” to perform customer due diligence and submit suspicious activity reports.

On January 10th, 2020, the Fifth Money Laundering Directive (5MLD) came into force. One of the biggest changes in 5AMLD is that all European Crypto companies must be registered by the competent authorities in their domestic locations, for example, Germany’s BaFin or the UK’s Financial Conduct Authority (FCA).

It makes changes in the treatment of virtual currencies:

- It implies a legal definition of cryptocurrency as “a digital representation of value that can be digitally transferred, stored or traded and is accepted…as a medium of exchange.”

- Cryptocurrencies and cryptocurrency exchanges are considered “obliged entities” to perform customer due diligence and submit suspicious activity reports.

2) The Bank of Lithuania and the European Central Bank work on development of own cryptocurrency

The Bank of Lithuania published a new research paper highlighting CBDC (Central bank digital currency) design choices as well as monetary policy and financial stability implications.This report is one more step to urge peers joining digital currency goldrush. The in-depth analysis comes ahead of the central bank's launch of 24,000 digital collector coins created using a blockchain-based approach, and the establishment of a sandbox platform for testing digital ledger projects, LBChain.

The Board of the Bank of Lithuania has approved the sample of the physical version of the digital collector coin – an original silver coin bearing a denomination of €19.18 to commemorate the year of the Act of Independence of Lithuania. LBCOIN is dedicated to this prominent Act and its 20 signatories.

On December 17th, the European Central Bank published a new proof-of-concept project called EUROchain. The report states, “That proof of concept boasts several novel features developed by the ESCB’s EUROchain research network using distributed ledger technology (DLT).” The project is a study on how privacy can be balanced with compliance procedures

3) The Cryptocurrency hype has subsided and this shows great promise for Crypto and Blockchain Technologies

Saga, a global, democratic, stabilised, non-anonymous digital currency, launched in an effort to build towards "worldwide money". SGA (Saga token) wants to replicate the mechanics of central bank national currencies and apply them on a global scale. 

Morgan Stanley vets launch cryptocurrency derivatives trading platform Phemex. “Phemex is ten times faster than traditional crypto trading platforms with the ability to manage 300,000 TPS – the fastest matching engine online,” said Jack Tao, who served as a senior leader at Morgan Stanley's electronic trading desk.

PayPal invests in cryptocurrency compliance startup TRM. PayPal has joined a $4.2 million funding round for cryptocurrency compliance and risk management platform TRM Labs. PayPal Ventures was joined by Initialized Capital, Blockchain Capital, and Y Combinator as investors, bringing the total raised in TRM's seed round to $5.9 million.

Credit union-owned blockchain outfit CULedger is ready to launch its cross-border payments product, CUPay, next year. The firm has unveiled a viable proof-of-concept version of CUPay, which is built on R3's Corda platform, and is designed to facilitate connectivity between multiple payment networks, both traditional and blockchain-based.

Opening a Safeguarding account

European Authorised Payment Institutions (PIs) and Electronic Money Institutions (EMIs) must comply with certain safeguarding requirements according to PDS2 Directive (Directive 2015/2336/EU) and the EMI Directive (Directive 2009/110/EC). The PI and EMI regulations impose certain safeguarding requirements to protect funds received from customers and in return provide payment services or issue e-money.

What's a safeguarding account

A safeguarding account – is a special account set up with a Bank in which PIs and EMIs hold customers' money. The main function of a safeguarding account is to separate client money from operational funds and to block the access to this money by third parties.

A safeguarding account is the mandatory requirement to obtain your payment license

Having a safeguarding account is one of the obligations in order to obtain your payment license in Europe and you cannot get your license before you have the safeguarding account. There are hundreds of Banks in the EU, but not many of them are ready to cooperate with fintechs. It can take more than half a year for the bank to make a decision about opening the account. Banks consider opening a safeguarding account too risky and can refuse at any time and without any explanations. All this makes the process of opening the safeguarding account very challenging.

Regulators have specific deadlines for making a decision about PSP licensing. For example, the UK`s FCA have 1-year deadline after an application submission – during this period they should either issue the license or refuse. In other words, in case the bank refuses to open the account 2 months before this deadline – you will not have enough time to open the safeguarding account in another bank. It means that you will lose at least 1 year of your time and all the money invested to prepare the application. No account – no license! What's more: some regulators require a statement letter from the bank, which is a mandatory too. And banks can refuse to sign such a statement. No proper form letter – no license too!

What to do? Choose only banks, which have positive records in opening safeguarding accounts and ask Advapay for assistance.

Fintech trends to watch out in 2020

The evolution of technologies in financial services is expected to accelerate, as the global fintech venture capital (VC) investment has reached $30.8 billion in 2018, up from $1.8 billion in 2011 with the US, UK, and Germany being the top investment countries.

On the one hand, fintech companies currently represent a small share of the industry, just 6% or $674,9 billion of the total annual revenue of financial services (Crunchbase & IMF-WB, 2019). On the other hand, fintech accelerates growth and innovations of the global economy and a quarter of the financial service industry's venture and start-up funding is directed to this area.

We believe the future is still clouded with uncertainty, while fintech continues to grow than ever before. To cut through all these fintech discussions and forecasts, we have identified current trends and drivers in financial services.


Bitcoin can be considered as a speculative gamble on a store of value. For example, in December 2018, Bitcoin and other cryptocurrency prices dropped to its lowest, and later experienced another collapse.

To support cryptocurrencies, new regulatory authorities are trying to make crypto more transparent and governed. Financial Action Task Force (FATF) has also started checking how countries implement Crypto Standards that were released in June during the G20 summit when all the leaders agreed to comply with international requirements for crypto-assets and related service providers. More strict regulations were introduced to avoid global risks and financial instability associated with the issuance of stablecoins. In October, Facebook’s Libra project hit regulatory roadblocks in Europe, and PayPal, eBay, Visa, Mastercard, and Stripe dropped out of this initiative. This case and a growing interest of cryptocurrency issuance may explain why the European Union recommended the European Central Bank (ECB) to look into issuing its own digital currency.

When it comes to Europe, Estonia still remains the most preferred destination for blockchain companies. The mild jurisdiction has issued around 2000 crypto licenses, because of its license terms in the industry. Meanwhile the Swiss Financial Market Supervisory Authority (FINMA) recently approved bitcoin banks and issued licenses to two blockchain service providers for the first time. Today, one of them - cryptocurrency bank SEBA - is now fully operational and offers Swiss clients to open an account. Later in December, the bank will onboard clients from abroad.

From all this, we can also say that cryptocurrencies have great potential, and governments and banks will continue to explore new ways to support crypto projects and reduce risks.


The phrase super app was introduced by BlackBerry founder Mike Lazaridis. It is an all-in-one mobile app that includes multiple daily apps, including, social financial, insurance, and other services.

Super apps are still on the verge to enter the Europe market, but they have been actively used in the Asian-Pacific region. One of the mainstream apps in China is WeChat, an all-in-one messaging app, which offers games, online shopping, and financial services. Known as Weixin in China, it is a flagship product of gaming and social giant Tencent that was founded more than 20 years ago. Not so long ago, in 2017, WeChat Pay launched its services in Europe, offering its clients to link their account to international payment cards.

Another great example from Asia is Malaysian ride-hailing company Grab that has expanded in food delivery, medical advice, and financial services. In 2018, Grab acquired local Uber and UberEats.

Russia's Tinkoff is planning to implement a new super-app, which will combine traditional banking services with lifestyle and leisure features and a marketplace for third party API-based in-app options.

Taking into account the current trend of super apps, there is no surprise that Mark Zuckerberg is planning to shift the focus of Facebook from social media apps to a one-stop-shop messaging service worldwide.


The concept of Open banking means a shift from a very close model to a shared one, where different financial industry’s stakeholders can be authorised to access personal and other financial data. It means that control of data gets back into the hands of customers, while banks can embrace Open Banking and generate additional revenue by crowdsourcing the development of new services.

From now on, Open API will allow customers to connect to banks via different systems and apps. As a result, the competition will rise, and multinational companies will take advantage of implementing a payment functionality in their business processes or messenger apps. Next year, there will be definitely a surge of messenger apps that also offers financial services. Revolut is already operating in the market with an Open API solution that allows companies to automate payment processes by combining Revolut for Business account with their software or platform.


To deliver a comprehensive suite of solutions and enjoy the best of both worlds, banks need to establish a dialogue and cooperate with fintech companies. Otherwise, traditional financial institutions will only innovate under the circumstances, when the pressure from customers and competition rises.

What are the motives and benefits of banking and fintech cooperation? It is freedom and innovative services at customers’ fingertips because together fintechs and banks can work harder to introduce new technologies. To make it successful, groundwork related to compliance, regulations, and licensing requirements must be taken seriously.

SolarisBank is a benchmark in promoting cooperation and a new way of banking services. The fintech company offers Banking as a Platform (Baap) services with a German banking license, combining regulatory banking expertise and a start-up. In 2018, the company also partnered with Boerse Stuttgart Group (German Stock Exchange in English) to create a cryptocurrency exchange platform. But the most recent initiative is an agreement with Alipay.

Cooperation between banks and fintechs has extended to the UK. Santander Bank is one of the first banks in the UK to embrace blockchain based payments in cooperation with Ripple. The bank launched Santander One Pay FXa money transfer service that allows customers to client international transfers on the same or next day.

Another excellent example is synergy between Apple Pay and Goldman Sachs. Both giants are getting ready to launch a joint credit card that will incorporate the logo of Apple digital wallet. Everyone is on it, so does JPMorgan Chase & Co, which is also tapping the fintech industry and will invest $25 million to help start-ups targeting low-income Americans.


Cross-industrial fintech is setting foot into other industries, as it becomes more and more accepted and replaces many former industry systems.

With so many fintech companies on the market, the cost of sale in back-office and new services lowers. It is expected to see more and more partnerships and ventures in a multitude of industries. For example, ZAKA is a digital ID solution for Sub Saharan Africa that verifies identity using biometrics and help people get the loan and health services faster. Another African fintech is Akiba Digital. It is a savings platform with a gamified interface to educate and nudge unbanked users.

Wajenzi is an Amsterdam based Equity-Crowdfunding platform to kick-start and raise funding for diaspora businesses and investors, whereas MigPort is an Istanbul-based start-up that anonymously connects refugees with volunteers to solve their financial, bureaucratic, and educational problems, using the website or app.

Tokyo-based investment bank MBK stands out from the rest of the fintech companies and examples. It disrupts the EU real estate market with tokenization of the sale of a property in Estonia. The company has partnered with Singapore-based real estate firm BitofProperty (BOP) to make it come true.


Fintech and blockchain are connected quite well. It turns out that cryptocurrencies were the first use case of the distributed ledgers. However, blockchain and distributed ledger technology (DLT) differ. With blockchain, everyone on the network can see all the transactions, whereas with DLT that is not the case.

Blockchain can be used for different purposes – money transfers, settling trades, and voting. Using this technology, customers no longer have to confirm with a central clearing authority.

Do you think the zenith of blockchain will ever come? Blockchain cannot be used for every single problem, but for many sectors, it is the perfect solution.

We can see that banks, brokerages, insurers, and regulators are actively putting to good use the blockchain technology and it has only just started. The effort to support and speed up global payments is one of the biggest advantages. For blockchain and distributed ledgers have a bright future, but it is important to educate key stakeholders within companies, because the value proposition isn’t clear for many of us.

With about 82 live patents in hand, the Bank of America is the world’s largest blockchain patent holder and beats out even IBM, Mastercard, and PayPal . But the bank has recently grown doubtful that blockchain will amount to anything in the near future. Similarly, Ripple replaces the SWIFT and offers blockchain-based payment transfers worldwide. Swiss multinational investment bank UBS, Royal Bank of Canada, and the National Bank of Abu Dhabi have already adopted Ripple's solutions to provide real-time payment transfers.


Have you ever thought about making payments without being engaged with Visa and MasterCard? Actually, it is possible and in the long run, banks worldwide are thinking of replacing traditional payment networks with alternative payment systems.

When it is a question of Decentralized Finance, traditional financial services can be provided without any authority or intermediaries. A wave of crypto business, that has surged in the last few years, is moving really fast and bringing new payment platforms to life, including Google Pay, Apple Pay, AliPay, WeChat Pay, and blockchain-based Ripple.

One of the most recent development is the new Pan-European Payment System Initiative (PEPSI) that was created to manage all forms of cashless transactions. 20 European banks are setting up a payment system to challenge dominant Visa, Mastercard, Google, and PayPal. This is not the first-time banking institutions in Europe undertake a project of launching a European payment system. In 2012, they were working on the Monnet card project that actually never took off.


Bricks and mortar banks are heavily investing in technologies and leveraging their brand awareness to put up a fight with fintechs and technology companies that are trying to take stakes in financial services.

Today’s customers want 24/7 access and simple apps that require a little human contact. We can expect financial services apps will offer a wider range of functionalities from your phone. Banking apps are about to roll out cardless ATMs that improve transaction security, as the cardless functionality usually requires biometrics and built-in passwords. For example, Bank of America has a mobile app that includes an option of withdrawing money with smartphones at cardless ATMs. To build digital offerings in Europe’s banking and asset management, Berlin-based fintech company has secured funding of €41.5 million from Ping An’s Global Voyager Investment Fund. Ping An is one of China’s biggest financial groups. It is renowned for investing and delivering cutting edge financial services.

In addition, tomorrow’s banking will be shaped by Artificial Intelligence (AI). Banks of Europe are planning to actively use AI to interact with their customers, according to Accenture. AI together with blockchain are seen as key technologies that will change the concept of banking in the years to come.

All things considered, we have come to the conclusion that many innovations are making banking more personal, secure, and easy to use. Nowadays, banks and other financial service providers are set out to redefine their processes, services and how they interact with customers because technologies and customer expectations continue to evolve. In fact, fee-free payments, personalized services, cryptocurrency exchange, and lending platforms have emerged as a must-have in financial services.

Even though many financial institutions have already built cutting-edge platforms that include all this, there are more innovations to come! Just keep an eye on our blog articles to be the first one to find out.