This article is an excerpt from the Deliverable D4.1 Policy Recommendations for Investor Attractiveness created by Impulse4Women for the FINE Project. For the entire deliverable text, please find it in the Resources area of the website.
To build sustainable and competitive fintech ecosystems, regions must focus on both structural ecosystem development and targeted investment strategies. On one hand, fostering a robust local environment requires investment in talent, supportive infrastructure, collaborative frameworks, and inclusive digital solutions. On the other, co-investment mechanisms, where public institutions and private investors jointly fund fintech ventures, have proven effective in increasing capital availability while aligning innovation goals with broader economic policy. Together, these approaches form the foundation for long-term growth in Europe’s emerging and moderate fintech hubs.
DEVELOPING A STRONG LOCAL FINTECH ECOSYSTEM
Developing a strong local fintech ecosystem requires strategic investments in education, infrastructure, collaboration, and inclusion. These foundations not only promote innovation but also attract private capital and support long-term sector resilience.
A skilled and adaptable workforce is critical to fintech growth. Talent development policies should focus on aligning educational curricula with real industry needs, particularly in high-demand areas such as data analytics, cybersecurity, and blockchain. Institutions that introduce fintech-focused programs and certifications help bridge the gap between academic training and the skills demanded by startups and financial institutions [1]. Partnerships between fintech companies and universities, including internship programs and research collaborations, have proven effective in developing a job-ready workforce while fostering innovation.
Establishing fintech incubators and accelerators is another key policy lever. These platforms offer mentorship, access to capital, regulatory support, and business development services – resources that are often scarce in early-stage ecosystems. Public funding and policy incentives can reduce the cost burden of setting up such hubs, while public-private partnerships help ensure their sustainability and integration into broader innovation frameworks.
Collaboration between fintech startups and traditional financial institutions should also be actively promoted. Regulatory sandboxes, where startups can test products in controlled environments, reduce the compliance barriers to innovation and build trust between actors.
Many successful ecosystems have created dedicated platforms that facilitate these partnerships, encouraging joint ventures, API integration, and shared product development [2]. Streamlining legal and regulatory processes can also lower the friction involved in forming these collaborations.
Finally, promoting financial inclusion through digital solutions should remain a core objective. Countries that invest in digital public infrastructure—such as e-identification systems and open banking frameworks, enable fintechs to extend services to underserved populations more efficiently.
Mobile banking platforms, supported by consumer protection laws and literacy initiatives, play a vital role in expanding access to financial services in rural and low-income communities [3]. Ensuring inclusive access to innovation aligns with ESG standards and expands the market reach of fintech products. By advancing these four pillars: education, incubation, collaboration, and inclusion, governments can create the conditions for a dynamic and resilient local fintech ecosystem.
INCREASING INVESTMENT THROUGH CO-INVESTMENT METHODS
Increasing local investment through co-investment methods is a strategic approach to bolster fintech development and economic resilience. By leveraging both public and private sector capital, co-investment models reduce risk, increase available financing, and support innovation at scale.
Governments play a vital role in launching and sustaining co-investment ecosystems. One major policy step has been the European Commission’s introduction of the Savings and Investments Union (SIU) strategy, which aims to channel citizen savings into productive investments to fund growth-oriented companies across the EU [4]. Public authorities are also integrating fintech tools into service delivery and procurement processes to promote adoption and signal confidence to the private sector [5].
The private sector—especially venture capital firms—remains central to successful fintech scaling. Across Europe, VC investment in fintech has been strong, with major funding rounds in 2024 including Monzo Bank’s $605 million and WorldRemit’s $267 million, signaling continued investor confidence in the sector [6].
These injections of private capital are often amplified when paired with public co-investment initiatives that align with national or EU innovation strategies. Establishing fintech-focused investment funds provides a dedicated vehicle for this kind of blended financing. The European Investment Fund (EIF) has been a leader in this space, channeling over €43 million into tech companies across Germany, the Netherlands, and the Nordic countries [7]. These vehicles typically operate with government support but are structured to attract institutional and private co-investors, ensuring both strategic alignment and financial scalability.
Several EU-level initiatives illustrate the potential of successful co-investment. The European Innovation Council (EIC) Fund offers equity support to startups through co-investment with vetted private sector partners. It prioritizes high-potential companies in sectors like fintech, healthtech, and green technologies, enabling them to scale through a curated network of aligned investors [8]. Meanwhile, the European Investment Bank (EIB) has launched the European Tech Champions Initiative, which aims to close the late-stage funding gap for EU tech firms by enhancing access to venture debt, equity, and listing support [9].
Through a combination of public leadership and private engagement, co-investment models offer a powerful strategy to unlock capital, build trust in local fintech ecosystems, and support long-term growth.
IMPLEMENTATION ROADMAP FOR LESS DEVELOPED REGIONS
Developing a robust fintech ecosystem in less developed regions necessitates a structured implementation roadmap that engages policymakers and stakeholders, outlines short-term and long-term strategies, and incorporates metrics for measuring success.
Effective collaboration among governments, financial institutions, entrepreneurs, and technology providers are essential for building trust and momentum within the ecosystem. Policymakers should focus on designing regulatory frameworks that support innovation while safeguarding consumer interests and financial stability. These frameworks must include clear licensing procedures, transparent compliance expectations, and active stakeholder engagement mechanisms.
Investing in digital infrastructure—such as broadband access and secure payment systems—is equally vital, as is building digital literacy across all segments of the population to ensure equitable access to fintech services [10]. Private sector stakeholders, particularly banks and tech firms, should be encouraged to collaborate with public actors through policy dialogue, pilot programs, and co-financing models that strengthen regulatory agility and market readiness. Short-term implementation strategies include the deployment of regulatory sandboxes, which allow fintech firms to test new services under controlled regulatory conditions. These environments provide valuable learning for both innovators and supervisors, helping to refine oversight tools before full-scale market adoption [11].
Policymakers should also prioritize capacity-building programs for financial supervisors and fintech operators alike, ensuring that regulatory bodies remain up-to-date with evolving technological standards. Market diagnostics—such as mapping financial access gaps, digital usage trends, and barriers to SME finance—can help identify entry points for fintech solutions tailored to the needs of the region.
Over the long term, governments should commit to national fintech strategies that offer a clear vision, including targets for innovation, inclusion, and competitiveness. These strategies should integrate cross-border collaboration and participation in global fintech networks, which allow for knowledge exchange and regulatory harmonisation. International engagement also helps smaller markets align their frameworks with global standards, making them more attractive to investors and service providers [12]. Ensuring these strategies are implemented in tandem with infrastructure development—especially in under-connected or rural areas—is key to long-term success.
To monitor progress, regions must adopt reliable performance indicators. These include financial inclusion rates (i.e., changes in the share of the population with access to basic financial services), investment levels in the fintech sector, and the number of newly launched fintech products and services. Additional metrics should track user adoption rates and satisfaction, particularly among underserved demographics, and compliance levels with established financial regulations. Taken together, these indicators provide a holistic view of ecosystem health and guide iterative policymaking.
By following a roadmap grounded in collaboration, phased reform, and measurable outcomes, less developed regions can build resilient fintech ecosystems that serve as engines of inclusive economic growth.
