May 27, 2022

Banking ecosystem and innovation: the fintech revolution

Since 2019 Italian Angels for Growth, Italy's largest group of professional business angels, has opened its doors to national and international companies interested in researching and promoting innovation. Among the IAG Corporate Partners from the first period is also Banca Finnat.

Banca Finnat Euramerica can be dated all the way back to 1898, when it operated first as a Foreign Exchange Agent, then as a Financial and Stock Exchange Commissioner, then as a Stockbroking Firm and finally - since 12 February 1998 - as a Banking Group.

Founded by Pietro Nattino in the late 19th century, the Bank is run today by the fifth generation of the same family.

The Banca Finnat Euramerica S.p.A. Group offers a wide range of services including Private Banking & Wealth Management, Trusteeships, Services for Institutional Investors, the Advisory & Corporate Finance service, the Real Estate and Property Funds service and Banking Services.

Since 2019 Italian Angels for Growth, Italy's largest group of professional business angels, has opened its doors to national and international companies interested in researching and promoting innovation. Among the IAG Corporate Partners from the first period is also Banca Finnat.

While fintech continue to grow, traditional banks must evolve toward a hybrid model through the modernization of their operations. So many challenges in this sector. We talk about this with Alberto Alfiero, Deputy General Manager of Banca Finnat.

IAG and its business angels focus on the seed stage of a startup, supporting entrepreneurs not only with capital, but also with the expertise and business network of experienced and established professionals in their field, with the aim of also nurturing the pool of potential companies that will go public tomorrow. Your financial reality is close to entrepreneurs in more mature stages of their development, including IPOs. How do you see the collaboration between a business angel association like Italian Angels and a financial reality?

As you correctly observed a reality like Banca Finnat, when it looks at the world of Venture Capital, does so with a particular focus on companies that, although young, can be assisted on multiple fronts: certainly IPOs, are operations of extraordinary interest to us. But while not going as far as IPOs, which are an important but concretely considerable milestone only for grown startups, our group can also provide support for other needs that are far more widespread and common among young companies. I am thinking, for example, of managing relationships with their shareholders (through our Fiduciaria) or the possible issuance of Mini-bonds or otherwise assisting the entrepreneur in extraordinary finance transactions.
Business Angels represent a bit the other side of Venture Capital: that of investors, which Finnat looks at with equal interest. Many of our clients are Venture Capital investors, some through funds or vehicles, some directly in startups. Among them are also some IAG partners. Our solutions for them are diverse and meet different levels of needs: from the more "basic" ones related to mere operations to the more sophisticated ones.

Investors are becoming increasingly sophisticated with interests in supporting the economic fabric of the country system. How have your services evolved for those who want to invest and what opportunities do the new regulations offer in terms of tax breaks and beyond?

I'm going to latch onto the previous answer: our services have also evolved to meet more sophisticated needs.

I am thinking, for example, of the possibility through our Luxembourg-based SGR to set up Funds dedicated to Venture capital or SMEs, perhaps reserved for predefined groups of investors.

Or I am thinking of the launch, last year, of our service on PIR Alternatives, with which we are enabling investors to hold within a single "container" not only direct stakes in Startups but also funds of any kind (open or closed) as well as listed financial instruments on which we give the possibility to operate freely provided, of course, that they comply with the constraints provided for by the regulations (which we take care to verify on an ongoing basis).

I think it is superfluous to highlight the considerable advantages, especially fiscal ones, of an alternative PIR into which such varied assets can be placed, in total autonomy.

Coopetition, or collaboration between entities that in theory should be competitors such as banks and startups, is now crucial. The banking ecosystem can strengthen its competitiveness by focusing on a well-rounded view of innovation. Where do we stand in Italy?

We are further behind than other countries, but we are catching up very quickly. There has been a significant acceleration in recent years. In banks, not only in specialized ones like Banca Finnat, but also in more traditional ones, there is now a widespread awareness of the importance of innovation for the Country System. And also, on the need to direct investment and its activities on the real economy, which in our country, more than elsewhere, means small businesses and young entrepreneurs.

The technological revolution of fintech has had an impact on all economic actors involved, challenging the traditional banking model and its method of setting up relationships with an increasingly demanding and digitized clientele. What developments do you foresee?

The term fintech is very recent. And it leads one to think that only recently has the world of Finance begun to confront technology.

This is not the case: this is a path that has revolutionized the Italian financial sector for many years now.

I cite a personal experience as an example: my professional activity has always been contiguous with stock markets. People with a few white hairs, like me, perhaps have a vague memory of television images in which traders could be seen concluding contracts shouting and making curious hand signs in a language understandable only to them. That was stock market trading-a then very "physical" job that has completely disappeared. By now, in fact-for a long time! - stock exchanges are basically computer companies. I occasionally try to explain to my children what my work as a stockbroker in the early days of my career consisted of--and I can't! It is something that, just by virtue of a technology revolution, is now so outdated that it is incomprehensible to them. And processes like these have affected countless aspects of finance and banking. In the 1980s and 1990s we called it the IT revolution, then "digitization," now we call it fintech.... But the phenomenon is not new: it is certainly accelerating and has increasing impacts; so, there is no lagging behind: But this is as true in banking and finance as in so many sectors