Cyprus and the Fintech Story

Article written by Contentworks Agency for Gold Magazine

As an up-and-coming fintech hub with a flourishing finance sector and exciting potential, it’s clear Cyprus has more to offer than beaches, weather and hospitality. This little gem in the Mediterranean is making some revolutionary moves when it comes to fintech and people are taking notice. In this article, Contentworks Agency, a leading marketing agency for the fintech and finance sector and media partner for Fintech 3.0 takes a look at Cyprus and the fintech story.

Fintech in Europe – what you need to know

Before delving into the evolution of fintech in Cyprus and looking at key developments and achievements, it’s important to understand the wider fintech movement. So, here are some useful stats to help showcase why fintech is a sector to watch closely.

  • According to a Juniper Research forecast, revenue generated by fintech companies will skyrocket from approximately $263 billion in 2019 to $638 billion by 2024.
  • Fintech is Europe’s largest investment category representing 20% of all global investments.
  • European fintech companies have created over 2x more value than any other tech centre in Europe.
  • Many fintech start-ups have reached unicorn status meaning they’re worth more than $1 billion. This shows how fintech innovations are in high demand with unicorn companies including Brex, Monzo and Revolut.

Fintech in Cyprus – A Dynamic and Inviting Hub

Financial services remain the fastest growing sector of the Cypriot economy, with the island being an increasingly attractive fintech hub for many significant reasons. Firstly, Cyprus has a strong and sophisticated financial services centre with a full legal framework. The Cyprus Securities and Exchange Commission (CySEC) governs activities and ensures financial regulations and operations comply with the European MiFID financial harmonised law.

The strategic geographical location of Cyprus (close to Europe, Africa and the Middle East) as well as the country’s developed free market economy, the lowest corporate tax rate in Europe (12.5%), advanced telecommunication network, professional human resources and a high standard of living are also attractive for anyone looking to set up a fintech company.

This goes a long way to explaining why there’s already an impressive 236 fintech start-ups in Cyprus alone offering services such as real-time investment portfolio securitisation and advanced performance analytics as well as automated order processing and investment execution. Of course, fintech is all about streamlining and improving traditional financial services to make them safer, more secure and as efficient as possible.

Foreign exchange companies (Forex) and international money transfer businesses are helping to pioneer the fintech movement in the Cyprus by recognising the island’s qualities as a global specialist centre for FX. Companies setting up base here include electronic money institutions including prime brokerages, major platform providers, liquidity management companies, specialist professional services firms, regtech companies and reporting companies. Other fintech companies include authorised credit institutions, investment firms, insurers and other payment institutions.

Cyprus and the Fintech Evolution

A lot has happened over the past few years with regards to the fintech evolution in Cyprus. Let’s break it down and look at some of the highlights.

  • 2017 – Cyprus Fintech Expo

The Cyprus Fintech Expo 2017 hosted by Hellenic Bank in Nicosia is a great place to start. Why? Because it recognised the ‘new’ emerging reality of fintech on the island. The one-day event welcomed a host of financial and fintech pioneers including Natasha Kyprianides, a fintech thought leader with extensive experience within the banking industry, focusing on leading digital strategy and digital transformation journeys. Attended by industry visionaries and featuring exciting fintech exhibitors, this Fintech Expo kicked off a new adventure.

  • 2018 – Launch of Innovation Hub

September 2018 saw huge progress as CySEC launched its fintech and regtech-focused Innovation Hub, with the aim to address and explore the quickly evolving fintech and regtech industry. Working hard to become a European leader in ‘disruptive’ technology, the Innovation Hub was designed to offer fintechs specialist, regulatory expertise. While fintechs could benefit from CySEC guidelines, they could also provide CySEC with suggestions and information about the sector helping the regulatory body to better understand the risks and benefits of fintech technology – particularly regarding platforms using blockchain technology. The Innovation Hub was largely focussed around investor protection.

Demetra Kalogeriou, Chairwoman of CySEC, said at the time:

The establishment of the Innovation Hub marks an important and exciting step for CySEC’s supervision of new and innovative fintech companies in Cyprus. In promoting closer ties with these fledgling but fast-growing industries, we aim to best protect investors by fully understanding the risks and benefits these new products bring.

  • 2018 – Blockchain and Fintech collaborations

Other exciting news came in November 2018, with the announcement of a blockchain collaboration. Blockchain plays a key role in fintech innovations and therefore developments in this realm have a knock-on impact on the industry. Invest Cyprus joined forced with VeChain Foundation, a Singapore-registered legal entity with focus on building public blockchain solutions and Cream, a US-registered company with a focus on blockchain project strategic advisory and investments, to pursue blockchain initiatives in Cyprus.

Invest Cyprus commented:

“To facilitate a new digital age through blockchain technology, VeChain and Cream will make suggestions to Invest Cyprus including policy reform that enables blockchain as an underlying infrastructure for operations and financial services. The parties will work together to accomplish several national level investment strategies involving the advancement of blockchain technology and blockchain powered economies. This cooperation will show the use of blockchain technology in financial services, investments and economic reform moving into many other aspects of society, in the context of government policy developing a new era of blockchain technology in Cyprus.”

2019 – Small Fintech Convinces Tier 1 Bank to Establish Cyprus Presence

Things continued to escalate throughout 2019. As well as the iFXEXPO Limassol which covered many fintech-related themes and Decentralized organised by University of Nicosia which saw companies making use of fintech advancements such as payment apps to secure new investment, other waves were created. Point Nine, a small, Cyprus-based fintech convinced a Tier 1 Bank to have a presence in Cyprus, thereby further confirming Cyprus’ reputation as a finance/fintech hub. Indeed, Mitsubishi UFJ Financial Group, one of the biggest banks in the world, acquired Point Nine through its subsidiary Mitsubishi UFJ Trust and Banking Corporation.

A statement read:

“MUFG, together with Point Nine, strive to deliver efficiency, speed, and organization to clients’ complex technology and data needs.”

Co-founder and Partner of Point Nine, Pavlos Christoforou said of the acquisition,

“I believe that when they got a first-hand look at what we do and how we work they decided that it was to their benefit to integrate our operations, instead of setting up a new entity from scratch.”

The Future – What Lies Ahead?

Cyprus has laid some great fintech foundations with the government pledging to double expenditure on developing technology and increase private contribution as part of a 2019-2023 national strategy on Research and Innovation. This is designed to attract fintech and blockchain start-ups as well as global companies looking for a practical and advanced business hub. The proposal, branded Innovate Cyprus, envisions the island as a dynamic and competitive economy with research, scientific excellence, innovation, technological development and entrepreneurship at its core.

It’s an exciting time for Cyprus with 2020 getting off to a strong start with the IMH Fintech 3.0 summit taking place on 16th January at the Hilton Park Hotel, Nicosia. The one-day event welcomes fintechs, finance companies and thought leaders and will feature a host of inspiring speakers including Dr George Theocharides, Chairman of the Board of Cyprus Blockchain Technologies Ltd. and Associate Professor of Finance at CIIM. Fintech 3.0 will cover the advancement of fintech developments and address certain industry challenges.

With high-profile sponsors including Cablenet, CRM.COM, G.A.P. Vassilopoulos Group & Worldline | SIX Payment Services (Europe) S.A., Hellas Direct, iSPIRAL, JCC Payment Systems, Mellon (Cyprus) Ltd, Priority, Zebra Consultants | Red Hat, ATC, CL8, EY, KPMG, Moebius, NETinfoPAY Ltd, NetU, Paysafe and Bolt, this will be an event to remember.

Contact the Contentworks team to discuss content marketing for your brand and to arrange a meeting at the upcoming summit.  The global fintech industry is evolving at a rapid rate with Cyprus keeping up with the latest trends. Join us as we enter a brand new decade of innovation.

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