Why Doesn’t Europe Have a Financial Super App?

“Another two years.”

That’s all the time Cyril Chiche, co-founder and CEO of French FinTech unicorn Lydia, believes it will take for France to stand shoulder to shoulder with the United Kingdom or Ireland, currently the top destinations for startup funding in Europe.

And there is data to back that possible outcome. According to recent data from Pitchbook, venture capital (VC) investment in French startups doubled in the past year, growing from €5.1 billion to over €11 billion ($12.5 billion) in 2021. And even though that figure trailed behind the 26 billion pounds ($35 billion) the U.K.’s tech sector raised last year, the rapid acceleration in startup funding in France cannot be denied.

Read more: VC Investment in French Startups Doubles in 2021 to Hit $11.3B Despite Funding Gap Between Regions

Barely a month into the new year, five new unicorns have been minted so far in France, enabling the country to hit the 25-unicorn target it was aiming to achieve by 2025 three years in advance.

“If you look at it from a global perspective, there are only 1,000 unicorns in the world so the fact that France was able to get [several] in the last few months is even more so spectacular and proof that as an ecosystem, France is definitely on the global map now,” Chiche told PYMNTS in an interview.

For Chiche, one of the key factors driving this growth in funding is the increasing number of globally competitive scale-ups in France with a proven capability to build innovative solutions that puts them on par with Israeli, Asian or Silicon Valley firms.

He also highlighted the efforts made by recent governments that heavily invested and created the conditions for both “sound investment” in early-stage companies and also facilitating the hiring of international talent with initiatives like special visas.

Related: French Super App Lydia Raises $100M, Valued at $1B

As one of the biggest success stories to come out of France, Lydia has certainly benefited from those efforts, reaching unicorn status last month after it raised $100 million in a Series C round and bringing its total funding to over $260 million.

Founded in 2013, Lydia began as a peer-to-peer (P2P) payments app like Venmo and has since grown to become the second-most downloaded FinTech app in France, allowing its 5.7 million customers, most of whom are in the 18 to 35 age bracket, access to other offerings such as savings accounts, loans, insurance and more recently cryptocurrency trading.

“We believe that by adding all these features and adding innovation with the specific Lydia DNA which is to bring a human side to the banking services, now we have what it takes to get people to [accept that] we are a good alternative to the classic bank,” he noted.

From Platform To Primary Account

The company’s plan now is to reach 10 million European customers using Lydia as their primary account by 2025. Chiche acknowledges that it’s a very ambitious goal, however, because adopting a payment platform as a primary account is a significant move and will require raising the bar in terms of how much trust people must put in their solution.

But they’ve been working on building that trust in the last nine years, he said, consistently demonstrating that they have the technological capability to improve on the delivery of traditional banking services beyond the peer-to-peer (P2P) payments service Lydia started with at launch.

And achieving that customer milestone is part of a wider strategy to become a financial “super app” for millennials and Gen Z customers in Europe, like China’s WeChat and the U.K. FinTech Revolut.

Chiche said instead of spending the next decade refining the product and expanding into new geographies after achieving their initial goal of enabling consumers to make payments on their phone, they rather opted to aim higher, buoyed by a favorable regulatory environment, open banking adoption and particularly the strong demand among consumers for a service that both online banks and traditional banks were not delivering.

He compared today’s traditional banks and their online interfaces to online stores where people can buy CDs, a mere improvement from shopping at a physical store that proves that not much has changed over the last few decades.

“Honestly, what you want is Spotify. You want to be able to listen to any music off the album from any artist anywhere in the world at any time in a taxi or in the train or anywhere, and all this from your mobile,” Chiche explained.

He added that the ongoing internet mobile revolution has changed society from ownership of physical goods into digital access to goods, putting the traditional banking offering well below the expectation of today’s users.

“What they [consumers] want is something that is on par with Spotify and Airbnb and all these major category defining companies in other sectors and banks. We don’t have this for banks, and we need one and we actually want a multiple of them,” he said. And with Lydia aiming to start that super app trend, it’s likely others may soon follow suit.