Sugi’s Sofitto is based in Belgium — Why did we choose it as a strategic point?

Even though the Sofitto and Sugi teams are a conglomerate of international talents and minds, it all started in Belgium, the fintech hub of Europe.

How did we land there?

It began with studies of Electrical Engineering at KULeuven, where Alexander Vasylchenko, the Co-founder and CEO at Sofitto, obtained his Ph.D. KULeuven has been ranked the 5th most innovative university in the world and the only European university among the top ten.

During and after his studies, Alexander stayed involved in R&D of high-end industrial projects, gaining invaluable experience for the blockchain startups he later ran as CTO, including Mycelium and Grid Singularity.

In terms of a broader environment, Belgium definitely provides much of what is needed for a fintech company such as Sofitto.

Brussels, the center of EU and fintech

Brussels, and Belgium in general, are known as the institutional and financial centers of the European Union. Due to its central location, Brussels is easy to reach from most other European financial hubs, making it an ideal spot for bringing together fintech innovators and financial institutions.

Especially now, in the light of Brexit, British financial institutions are looking for options to maintain their role in Mainland Europe, and Brussels is frequently their first choice. Several have already opened offices there, and many are following.

Belgium sits on the 5th place in the European fintech ranking counting the number of fintech deals in 2017, according to B-Hive, the European fintech platform. B-Hive is a vibrant ecosystem of front-row providers of financial services, dynamic startups, and government actors working in finance and technology institutions.

Not only is the adoption of internet and mobile apps for financial services growing across Europe, but also is the Belgian fintech community seeing an increasingly higher implementation of blockchain technology, artificial intelligence (AI), and data analytics. This visionary posture is attracting new startups and projects combining new digital technologies with more traditional payment methods. It was also the reason Sofitto embraced Belgium’s understanding of its mission and the potential for bringing it to fruition.

Fintech going live

Apart from the work and research conducted at institutions and universities, fintech is an active and frequent topic of many events both in Brussels and in other Belgian cities.

The recent Belgium Digital Week was explicitly focused on the emerging fintech sector in the region and on enabling VC investment to Belgian fintech industry.

Payments and open banking / APIs were discussed at the latest FinTech Belgium Summit, the event recognizing and supporting cross-industry diversification and new technologies, such as blockchain, AI, and Machine Learning in relation to fintech.

The traditional image of financial industries has been quite disrupted recently, as it merged with the latest tech and user-friendly solutions turning fintech into an attractive field for young people especially, bringing new energy and visions into it.

All in all, Brussels and other Belgian cities are known for providing excellent opportunities for fintech companies, with high R&D funding, attracting multinational companies to open their offices there with a potential to reach well across Europe.

Where to set the headquarters was a no-brainer also for Sofitto, since it is crucial to be positioned among the strongest fintech players in the EU and to have the opportunity to meet with them face-to-face within a day or even hours.

Leuven, the Flemish technology hub

Flanders region as a whole is bustling with fintech innovations and organizations supporting it. It is home to international decision-making institutions, global payment infrastructure providers, and highly engaging business ecosystem.

Tens of research centers, incubators, accelerators, and science parks, as well as over 100 tech companies, are contributing to the Flanders innovative ecosystem.

The Flemish city of Leuven is known mostly — but not exclusively — as a vital tech center due to the role of the local tech giant IMEC. This independent research hub for global electronics and digital community, focusing on nanoelectronics and digital technologies, is home to 4,000 people working on the latest cutting-edge tech and hardware improvement.

IMEC’s cleanroom capacities, living labs, and training facilities are of invaluable importance for product fine-tuning, while their funds and entrepreneurial support, especially merged with iMinds, the Flemish digital research center, help new digital and tech companies set off and grow successfully.

With the Sugi NFC Wallet Card depending on the NFC (near field communication) chip as a crucial piece of hardware, we naturally went for the most experienced nanoelectronics specialists, the IMEC. As predicted, they met our expectations, and we’re proud to have a result of their decades-long expertise and knowledge integrated into the Sugi Card, to provide its users with the best and most reliable payment experience.

What else does Belgium provide for the growth of European fintech?

To help and support companies reach the market and implement the regulative standards, Belgium is home to several important organizations working on the European and international level of financial activities, among others:

• EPSM — European Association of Payment Service Providers,
• EAST — European Association for Secure Transactions,
• Federation FinTech Belgium — bringing together fintech companies in Flanders and Belgium as a whole,
• Agoria Financial Services Technology Club — a group of IT companies providing both software and hardware solutions to the financial industry market.

When it comes to funding, fintech startups and growth-stage companies can count on extensive funding support of the Belgian government, backed by insurance companies and banks, and gathering several major investors into one government super-fund for tech projects.

Entrepreneurs, governments, scientists, and businesses can get together and thrive through a strong network of Scale-ups, while the growth of companies is supported by expanded tax shelter and fiscal incentives for investments in development. This is especially important for young startups and SMEs looking to break ground in the highly competitive fintech market.

The impact of fintech in Belgium

It is evident that the financial industry and technology are one of the drivers of the Belgian economic ecosystem. And with its central and influential position, Belgium is clearly influencing the European Union as a whole and beyond.

The European Payments Council (EPC) in Brussels is the cornerstone fintech institution providing guidance for electronic payment methods in the Single Euro Payments Area (SEPA), with the aim to enable a uniform and synchronized payment experience to citizens and businesses across the SEPA, not just their home country.

Directly and indirectly, the Council is affecting the ways citizens of over 34 European countries pay for their goods every day, summing up to almost 40 billion transactions yearly. The standardization set by EPC is the norm for payment cards, also influencing the interoperability of mobile payments at the European level, to improve their convenience, safety, reliability, and cost-effectiveness.

All of this is undoubtedly a vital aspect needed to be accounted for in all endeavors of any fintech company. No matter how cutting-edge the underlying technology is, the payment service providers inevitably have to consider and apply the standards set by EPC, to be able to serve as broad a community base as possible. It is therefore much easier for the card producer to be in close touch with the institutions providing systemic guidelines, and Sofitto could definitely experience that first-hand.

Other financial institutions that are of strategic importance for fintech companies in Belgium include:

• European Payment Institutions Federation — international non-profit association for more competition among the payment service providers at the European level,
• Euro Banking Association — an organization providing a platform for the payments industry to implement regulations and support the development of market practices for a pan-European vision for payments,
• European Association of Co-operative Banks — a group of 28 financial institutions and member banks,
• European Banking Federation — developing legislative, regulatory and supervisory guidelines, to fully integrate a robust Single European Market for banking.
• Electronic Money Association — UK-based institution but a member of the Belgian EPC, gathering Europe’s innovative payment service providers and representing issuers of electronic money and other innovative payment methods.

From Belgium to Europe and beyond

Sofitto being positioned in the middle of the European fintech hub with 80 % of European purchasing power within 500 miles reach is undoubtedly a significant strategic advantage.

Even though it evolved somehow organically, the location we chose as our headquarters is proving itself to be a great starting point for all future destinations, as we are seeing and experiencing a high potential of the region, while being present in the evolution of the broader European market from the front row.

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