FinTech North News and Regional FinTech Developments

Live RegTech, Financial Inclusion, InsurTech opportunities in Madrid



Twin Pratt & Whitney engines roar as they lift me, along with 200 other Manchester-bound souls, into the night. 

Thousands of feet below, the bejewelled Spanish capital swiftly recedes into darkness. The city fades away, but opportunity does not. I may well be landing in Manchester at 11pm with a journey back to Leeds ahead of me, but I assure you this is far from a Spanish tragedy.   

With the support of Madrid Investment Attraction (MIA), I was lucky enough to visit Madrid for the first time earlier this week. MIA, the city of Madrid’s inward investment agency, have been engaging with FinTech North with the objective of establishing links between the thriving FinTech ecosystems of northern England and the city of Madrid.

Why expand internationally? 

In a time when funding is seemingly harder to come by than it has been in recent years, having international expansion as part of your roadmap for growth makes for a more compelling proposition for investors into your business. The UK has a huge domestic FinTech market, the 2nd largest in the world by most counts, so many entrepreneurs often don’t think global. Why not conquer el mundo?   

The Spanish FinTech Ecosystem: 

The four main sub-sectors of the Spanish ecosystem are; WealthTech, Neo-banking, Lending and Payments.  

The ecosystem itself is home to around 400 FinTech firms, a similar number to that of the northern ecosystems we support at FinTech North. Whatever the comparable numbers might be, it was clear to me when attending conferences in Madrid that Spain has a significant FinTech market.  

FinTech Across Spain:

Spain’s FinTech sector is powered by diverse, specialised hubs. León stands out for cybersecurity innovation, while Barcelona and Málaga drive fintech and tech advancements. In addition, Tenerife and Gran Canaria offer unique opportunities for digital nomads and tech firms, combining supportive ecosystems with strategic incentives, making Spain a distinctive player in the FinTech landscape.

Regulation in Spain: 

Much like the UK, some of the main regulatory trends in Spain are:  

  • Open Banking / PSD2 
  • AML/KYC 
  • GDPR 
  • The Sandbox, more on that later 

What are the opportunities for FinTechs in Madrid? 

  • RegTech – KYC/KYB/AML/ID Verification – Prime examples are digital onboarding with passport scans or scanning for suspicious transactions using Artificial Intelligence. 
  • Financial Inclusion – especially solutions that can support aging, the silver economy  
  • InsurTech  

Following meetings with some of Spain and Madrid’s main ecosystem facilitators (Banco de Espana, Finnovating and MAD FinTech – more on them later) it struck me there are some great live opportunities for our strong northern FinTechs to provide solutions to the Madrid/European/Latin American market.   

Spain has some huge national banks, some of which have strong presences in the massive LATAM market (Mexico itself is a market 4x larger than Spain, and that’s not counting Colombia, Argentina, Uruguay and of course Brazil. Both Spain’s banking sector and insurance sector are in need of RegTech solutions. Like the UK, these markets are grappling with an aging population and are in need of financially inclusive solutions that support the silver economy. 

What about Madrid? 

Some words on the city itself – having seen a decent amount of southern, eastern and balearic Spain, I was proud to tick off another wonderful city. Madrid truly is a capital of culture; thronged with restaurants, theatres, museums, galleries, as well as some fantastic outside spaces – particular highlights for me were the Museo del Prado, which boasted a stunning collection of Bosch, Goya, Rafael and Carravaggio, and Parque Retiro – which was almost on Central Park levels in terms of size and IMO was even prettier.  

The vibe in the city is certainly reflective of this cultural status, but it’s also fair to say that the people are far from boors – everyone I met was super down to earth and friendly, even when I butchered and occasionally abandoned conversing in Spanish. The food in Madrid was awesome, and as someone with a sweet tooth, I had a hard time resisting all the postres – it seems there’s a chocolatier or churrerria on every street corner.   

Anyway, back to FinTech – vamonos…   

One of the things that sets Spain apart from many European countries is its progressive regulatory sandbox. Like many countries around the world, the Spanish have to a large extent looked to the UK for leadership in how to successfully regulate and cultivate innovation, taking inspiration from the FCA’s approach with the Digital Sandbox. All of the major Spanish banks are actively involved in the Sandbox, and often working groups are created with them when companies apply to participate.   

The Sandbox is an initiative within the framework of the Digital Transformation Law for the Financial Sector, which is a controlled and unregulated testing area that will identify projects that improve the provision of financial services, with very specific supervision protocols dictated by the public bodies involved: the Treasury, the Bank of Spain, the Directorate General of Insurance and Pension Funds and the National Securities Market Commission. 

Much like the FCA’s sandbox a few years ago, the sandbox has 2x cohorts per year, one in March and one in September.  

To participate, companies must be:  

  • IT based 
  • Innovate for the financial sector 
  • Mature enough, be live 
  • Pose no negative impact 
  • Provide value in at least one of these areas: 
  • Facilitate regulatory compliance 
  • Beneficial for users 
  • Drive efficiencies for entities and markets  
  • Enhance supervision/regulation  

The sandbox is open to anyone and everyone, c.35% of applicants are FinTechs and 17% are banks, as mentioned above partnerships are often formed during this process. Applications can be submitted in English, although procedures will be in Spanish.  

USP’s for Madrid: 

  • All 3x Spanish regulators are based in the capital  
  • All of the main Spanish banks, significantly the ones large enough to have a LATAM base, are also based here 
  • It is the home of the Sandbox  
  • It is a key connecting route for flights between Europe and LATAM  

Opportunities for Northern FinTechs:  

In addition to those sector opportunities I mentioned above, I think there’s a real opportunity for a growth-minded FinTech to expand into Madrid and then simultaneously face two massive global markets – Europe and Latin America.    

Many of the largest and best engaged banks have a base in both Spain and LATAM – it struck me that a UK FinTech could expand into Madrid, go through the Sandbox, get connections and profile amongst the banks, then have a customer already based in LATAM as well as Europe. Three of the largest Spanish banks, Banco Santander BBVA and CaixaBank, all have bases in LATAM.  

More and more links are being forged between the Ibero-American world, with Spain and Portugal increasingly fostering bilateral links with Brazil, Mexico, Argentina, Uruguay and Colombia. There are some really cool innovations taking place in these markets, with Open Banking progressing especially well in Colombia.    

The LATAM and European markets are both very similar in size, around 700m people on each continent. FinTech adoption is sky high in Europe, and LATAM especially is ripe for growth, alongside the APAC market as a great place to gain traction and adoptions.   

Do your due diligence and consider reaching out with the below organisations when considering expansion:  

  • Reach out to FTN also!  

In conclusion, we believe there is a tangible opportunity for innovative northern FinTechs who are on their scaling journey to expand into Europe and LATAM via Madrid. If, like many of the FinTechs in our community, you specialise in RegTech, InsurTech, or if your proposition has a financial inclusion element to it, this would be a superb market to expand into.     

If you have any questions, thoughts or would like to collaborate in any way please reach out – strategically we’re here to support and develop Northern FinTech both inwardly and with outbound opportunities. 

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