A time of crisis is a time of opportunity, as well as a time of solidarity. The Madrid Capital FinTech (MAD FinTech) cluster, promoted by the ECOFIN Forum and the Madrid City Council, has been focusing for two months on helping to reactivate the economy through the business fabric of SMEs and the self-employed.
And the consequence of this is the historical milestone that for the first time in Spain, the FinTech industry is joining the State-guaranteed financing systems and the distribution mechanisms of the Mutual Guarantee Societies (MGS). Meanwhile, MAD FinTech is working with 20 Commissions and Working Groups to reinvent Finance in other areas as well.
On 19 February, when the world was still the one we knew, ECOFIN Forum and the Madrid City Council presented at the Palacio de Cibeles the Madrid Capital FinTech cluster (MAD FinTech), a multi-sector association called to reinvent Finance from Madrid and with the support of all public and private talent.
Among the members of the initial board, names such as Salvador Molina,President of the ECOFIN Forum, and former senior banking executives such as José Ignacio Rivero, Emilio Zurutuza, César Vacchiano, etc.; together with FinTech Circleas Finizens, N26, Bnext, October, Growly, Creditea, Aplázame, Zank, Housers, Tesoriza, Life.Box, Accenture, Entelgy, Everis, KPMG, Multigestión Iberia, Imagebank, Wizink, Evo Banco, Mastercard, etc.
MAD FinTEch’s initial board of directors includes Salvador Molina, president of the ECOFIN Forum, and former senior banking executives such as José Ignacio Rivero, Emilio Zurutuza, César Vacchiano, etc.; as well as FinTech CEOs. Miguel Angel Redondo and José Luis Moreno (Madrid City Council) promoted this clusterwith ECOFIN Forum.
On that day,more than a hundred companiessigned up, as part of their desire to support a project that will place Madrid and Spain at the forefront of innovation. Banks, insurance companies, technology companies, universities, law firms, consulting firms and FinTech entities joined this ship that is already contributing in solidarity to the reactivation and financing of the most sensitive business network, providing a bridge between the savings of individuals and the financing needs of working capital to open and reactivate consumption, trade, tourism, entrepreneurship and all economic sectors.
In support of MGS
At the end of March, a working group of Credit and Guarantees to SMEs and Freelancers led by FinTech entities such as Tesoriza, October, Growly, Housers, Capital on Tap, Creditea, Zank and Aplázame. They tried to make their knowledge of the autonomous fabric and SMEs available to public funds that in the form of guarantees and/or credit began to be designed to save hundreds of thousands of businesses and jobs. Su capacidad de distribubución y llegada a estos perfiles puede ser complementario y muchísimo más eficiente que la banca, ya que son especialistas de nicho y totalmente digitalizados, como requieren las circunstancias.
Durante las últimas semanas se han celebrado reuniones y cerrado convenios de colaboración para hacer llegar la financiación avalada por la Administración a través de Iberaval, Avalmadrid o Elkargi. Conventional formulas and new financing solutions from FinTech specialists are being analysed. El objetivo final es ayudar a salvar el mayor número de los negocios en peligro por falta de ingresos, de tesorería y necesidades de inversión para levantar la persiana.
The incorporation of FinTech to the structured financing by the Public Administration and its network of collaborating entities in the provision of guarantees (SGRs, ICO) is a milestone in the Spanish financial system and, as the general manager of one of the SGRs explains, “will help consolidate the necessary unbanking of business loans in the Spanish financial system”. This is a phenomenon that already existed in the United Kingdom, but the health crisis is also leading to other markets such as France, Italy and, thanks to MAD FinTech and the ECOFIN Forum, Spain.
Private savings can reach SMEs through participative financing platforms (PFP), crowdlending entities, factoring entities, specialists in instant microcredit for consumption or individuals, etc. MAD FinTech is opening the door to many FinTech entities to participate in providing credit with government guarantees of up to 80 or 100%.
Saving the Cultural Industry
At the beginning of May, the Ministry of Culture and Sports announced a programme of aid, tax incentives and subsidies to save Spain’s cultural industry. It also announced the contribution of 20 million euros to CREA SGR to promote guarantees through the COVID-19 Culture Line. An amount intended to mobilise EUR 780 million in loans from private entities, which will be 100% guaranteed. Of these 20 million, 3,750,000 euros are intended to cover the cost of the opening fee for guarantees for loans to companies in the cultural sector, and 16,250,000 euros for the technical provisions fund.
The important thing is CREA SGR’s willingness to give input to the distribution of these resources and guarantees to FinTech entities. The first agreements have already been signed between CREA SGR and FinTech entities that will facilitate this distribution of private savings resources to Spanish SMEs and self-employed workers which basically support the Spanish cultural fabric: the film industry, shows, publishing houses, the recording industry, musicals, theatres, the circus, animation, creativity, etc.
Madrid City Council has also thought of revitalising its cultural and leisure industry,which is also based on SMEs, micro-SMEs and the self-employed. Theatres, musicals, cinemas, circuses and live performances are the main attraction of Madrid’s cultural tourism. And the small production companies, directors, recording studios, catering, technical equipment rental, post-production, graphic arts, animation, audiovisual and many other related businesses are basically SMEs and freelancers.
TopTen FinTech 2020 leads Commissions and Working Groups of the MAD FinTech cluster: N26, Bnext, October, Woonivers, Creditea, Aplázame, Finizens, Housers, Tesoriza, Life.Box
A few days ago, the City Council announced the extension of the level of coverage of its contributions to CREA SGR. The agreement will allow the City Council to inject liquidity into Madrid’s cultural companies for a maximum amount of 80 million euros. It is estimated that there are 800 SMEs and self-employed people in the cultural sector in Madrid, providing guarantees of up to 100,000 euros per company. The City Council estimates that this measure could save 1,600 jobs and the cultural and leisurefabric of the city of Madrid.
The guarantees will be applied to the Madrid Covid19 cultural liquidity line, designed to provide immediate liquidity to cultural companies in Madrid, with a repayment term of up to 4 years and a 1.5 year grace period for the payment of the loan principal.
Trade and Consumer Group
Another of the Working Groups born with the crisis is the one that brings together entities that want to support the reactivation of Consumption and Trade in cities like Madrid, but also in others like Zaragoza, Valladolid, Teruel, etc.
Fintech and other entities of the FinTech Ecosystem that are partners of MAD FinTech participate very actively in this group. The role of banking and payment entities should be highlighted, such as Wizink, Evo Banco, Bnext, N26, Mastercard, Bizum, Woonivers, Senior Leader Card, Capital on Tap…; but also of technological entities such as Accenture, Entelgy, KPMG, Everis, Multigestión Iberia, etc.
In this group, several initiatives are being analysed and projected, many of which are aligned with the initiative of the Directorate General for Trade and Consumer Affairs of the Madrid City Council called “Voveremos si tu vuelves”.
Now, the cluster has started to roll despite the confinement; although, in fact, Reflection Groups had already been set up before 19 February, which helped to design, together with the companies in the FinTech Circle promoted by the ECOFIN Forum, the MAD FinTech cluster itself.