Spain’s FinTech Dark Horse Arrives

With a strong penetration of smartphones and mobile commerce, Spain is quickly gaining visibility in the FinTech world, and its capital city is leading the charge. Considered a “dark horse” in FinTech, Madrid is making strides to improve conditions for startups to flourish and boosting record venture rounds for its homegrown companies.

In this week’s installment of PYMNTS’ Weekly Tech Center Roundup, Madrid takes center stage and showcases why the tide is changing within its tech community.

Before we jump into the post, here are a few quick facts about Madrid and its tech scene:

The estimated population of Madrid is 6.5 million.

Madrid has the highest level of investment in R&D in Spain and has seen a rise in the number of incubators, accelerators and “pre-accelerators” in the city.

Spain’s capital city had more than 480 startups as of last year, with startups raising €659.4 million in private funding in 2015.

The City of Madrid recently launched an initiative to fast-track “smart city” startups.

The government is trying to encourage the growth of investment capital via FOND-ICO, a public fund of more than €1.5 billion that co-invests with VCs.

Madrid was ranked in 12th place in the European Digital City Index 2015.

Though Madrid is known for being Spain’s financial and business hub, it hasn’t always had a reputation for being a breeding ground for startups.

But Madrid’s tech community is in a state of transformation.

The city recently became home to one of Google’s three innovation campuses in Europe, and eCommerce giant Amazon also established its own tech hub. Big global companies aren’t the only ones flocking to Spain; the country has also gained a great deal of attention from venture capitalists.

“There has been an explosion of technology and digital entrepreneurship,” Liz Fleming, VP of international at Spain Startup, told The Local. “Venture capital investment in Spain has doubled over the past two years from €200 million to €400 million.”

Source{d}, an artificial intelligence startup, locked down $6 million in funding from investors, including Otium Venture and Sunstone Capital.

The company uses AI to match developers to the right jobs based on their skills. The technology analyzes the code of millions of developers to match them to suitable job openings.

“We can [find] people who are similar to your team,” Source{d} Cofounder and COO Jorge Schnura explained to TechCrunch. “This is all unsupervised learning since we don’t tell our algorithms which features to look for. It defines them itself.”

According to Eiso Kant, one of the startup’s founders and current CEO, the firm will look to expand commercials in the U.S. and within Europe. The firm also plans further product development efforts, including bringing its AI-driven analysis to other products geared towards developers, both free and paid for.

BBVA Rolls Out The FinTech Welcome Mat

Spanish banking giant BBVA is making it clear that is not just a bank but a FinTech-friendly bank.

During the South Summit FinTech event earlier this month, BBVA CEO Carlos Torres Vila said that the bank’s aim is to operate as a driver of opportunities for its customers.

“We are living in transformative times in which the arrival of new technologies is creating new opportunities everywhere, and BBVA wants to be there to be the best bank for its customers. In just over three years, technology has caused customers to make unprecedented behavioral changes. They increasingly expect to be able to interact with their bank using mobile phones,” Torres Vila said.

Unlike other traditional banks, BBVA uses a model, which is similar to that of startups, that keeps customer experience and technology as the focal point, rather than monetization, when it comes to solution development.

“This model allows us to create amazing solutions that are so convenient and simple that they end up transforming customers’ lives,” he added.

According to Torres Vila, there are many new technologies that have the potential to completely transform the banking business as we know it, such as Big Data, blockchain and artificial intelligence. BBVA’s strategy includes making use of Big Data and AI to delivered more personalized solutions to customers.

Startups Take On Silicon Valley

Twelve Spain-based startups were selected by the Spain Tech Center (STC) to take part in an immersion program in Silicon Valley. The program, called Immersion in Silicon Valley, allows startups to travel to San Francisco to submit their projects to investors and industry experts, while also getting to interact with other successful entrepreneurs. The companies participating in the fifth edition of the initiative include beBee, Blueliv, Cuatroochenta, ec2ce, Electronic IDentification, Estudiofuture, Libnova, MyVitale, Nautic Advisor, Net IP, SpiralAI and Wide Eyes Technologies.

Many consider the STC’s program to be a catalyst for expansion in the U.S. market. According to La Vanguardia, the 40 percent market share the U.S. maintains can be seen as a significant challenge to companies trying to figure out how to enter.

Toni Viñals, CEO of Net IP, said he is confident the experience will only help the company with global expansion. “We also hope to establish contact with investors and technology experts we can advise and discuss with them the acceptance that our product could have on the U.S.,” he added.

Similarly, Jorge Garcia, CEO of MyVitale, told La Vanguardia that the Immersion Program provided an avenue to find trade and financial opportunities and to look at possible agreements with reputable companies.