Exclusive: G+D's Sofiane Chouane on the future of European fintech

As policymakers across the European Union roll out new rules governing financial technology, startups and banks alike are adjusting their strategies to navigate a regulated digital finance environment with huge growth.

For companies working behind the scenes in payments infrastructure, those regulatory shifts are already changing how fintech firms build and operate their products.

Giesecke+Devrient, a Munich-based security technology company providing payment infrastructure and card issuance services, works with fintech firms across multiple markets, from digital security, financial platforms, and currency technology.

Sofiane Chouane, the company's global Head of Fintech, says regulation is increasingly shaping the sector's evolution.

According to the company's fintech leader, the strength of a country's fintech ecosystem depends on several factors, including domestic market size, regulatory clarity, access to capital, and the ability for companies to scale internationally.

"We see regulation impacting the market in several ways," he said, pointing to stricter anti-money-laundering requirements, new cybersecurity obligations, and tighter rules governing artificial intelligence in financial services.

Across Europe, a series of regulatory frameworks is redefining the operating environment for fintech companies.

Updated anti-money-laundering rules (AMLR in the EU) require firms to strengthen customer verification and transaction monitoring, while the European Union's Digital Operational Resilience Act is pushing financial companies to improve cybersecurity and manage IT risk more aggressively.

At the same time, the bloc's new AI Act is placing financial AI systems in high-risk categories, requiring companies to demonstrate transparency and maintain human oversight.

The next revision of the EU payments legislation is also expected to raise the bar for fraud prevention and clarify responsibilities across the payments ecosystem.

PSD3 (the third Payment Services Directive), together with the Payment Services Regulation (PSR), will introduce one of the most significant overhauls of EU payments law since PSD2 came into effect in 2018. The third iteration will include a much stronger regulatory focus on fraud prevention and liability once it is implemented. The agreed-upon text has still to be formally adopted and then implemented by member states.

Within the European Union, Chouane sees France and Germany emerging as major centres for fintech activity due to their large domestic markets and growing technology sectors. The European Central Bank said in an analysis last year that fintech firms tend to cluster in larger financial centres like Munich and Paris.

Chouane says the relationship between fintech companies and traditional banks is evolving. Rather than competing directly, the two sectors are increasingly becoming interdependent.

Fintech startups often provide the technology platforms that allow banks to launch digital services more quickly, while banks supply regulatory licences, infrastructure, and balance sheets that startups lack. Chouane describes the relationship as a growing "co-strategic dependence" between the two sides.

Traditional banks, he says, are also borrowing ideas from fintech challengers, particularly in user experience, digital onboarding, and customer engagement.

"Quite often, banks are asking, what are the fintechs doing in Europe?" he said. "It bring new ideas and faster ways of interacting with customers."

However, legacy systems still slow down many traditional institutions. In some cases, he noted, banks can take more than a year to deliver new projects, leaving them at a disadvantage compared with more agile fintech competitors.

Many European companies using AI systems to operate customer service or payment disputes are already delivering tangible cost savings and operational improvements.

AI is increasingly used in fraud detection, anti-money-laundering monitoring, and transaction risk analysis (areas that regulators themselves are paying close attention to).

Another major shift in Europe's fintech landscape is the growing bond between digital and physical financial experiences. While many fintech startups built their businesses entirely online, companies are increasingly experimenting with physical touchpoints as they expand their customer relationships.

Chouane points to initiatives by finance app Revolut, which has experimented with airport kiosks where travellers can obtain physical payment cards tied to their digital accounts. Customer expectations have also changed, making hyperpersonalisation essential.

"What I see as a trend is this combination of physical and digital touch points in Europe," said Chouane. "Fintechs, are really moving from this pure digital market to physical one - that's something that I'm seeing more. The consequence of that is the hyper personalization for cards and for digital."

For infrastructure providers like G+D, the changes are less about direct regulatory pressure and more about helping fintech partners adapt. Chouane says the company's role is to provide the technical reliability and compliance standards fintech firms need as scrutiny increases.

"Resilience and fraud monitoring is already in our DNA as a security technology company," he said. "What we try to do is guide fintech customers through the evolution of regulation and the potential impact on [their operations]."