CZECH REPUBLIC Law and Practice Contributed by: Ondřej Mikula, Jan Šovar and Markéta Klabouchová, FINREG PARTNERS
1. Fintech Market 1.1 Evolution of the Fintech Market The Evolution of the Fintech Market in the Czech Republic in 2024 After a challenging 2023, the fintech market showed encouraging signs of recovery in 2024. Although start-up investments hit their lowest level since 2020, the total volume grew year- on-year, reflecting a renewed confidence in the sector’s potential. This period of recalibra - tion has also fostered a healthier focus among fintech companies on sustainable growth and profitability, aligning with the evolving priori - ties of investors who are now channelling larger amounts into high-potential ventures. Despite the lingering effects of the 2023 crisis, the sec - tor is demonstrating resilience and adaptability, with many fintechs finding innovative ways to thrive in a more selective and strategically driven investment landscape. Among the year’s trends, artificial intelligence (AI) clearly triumphed. Some new start-ups based their businesses on AI, and established fintechs are either testing AI or already have it in place and are exploring ways to make better use of it. The importance of AI was underscored by Flowpay, named fintech of the year, for which AI is an integral part of its business. Technologies in the defence sector and quantum technologies also gained attention. The fund for technology start-ups was launched in the Czech Republic by NATO, whose accelerator DIANA is intended to support so-called dual-use tech - nologies. Issues That are Likely to Affect the Fintech Market in the Czech Republic in 2025 Cybersecurity and other use cases of AI can be expected to be key topics in the fintech mar -
ket in 2025, including AI transformation involv - ing operational optimisation and AI-enabled improvements to customer services and prod - ucts. The reasons include the growing risks of cyber-attacks, largely related to the advent of AI, as well as investor pressure for sustainability and efficient use of capital. Legal and ethical challenges will also grow, par - ticularly under the new AI Act, enforcing stricter requirements for transparency, accountability, privacy and effective risk management systems. From a regulatory perspective, fintechs will need to comply with the requirements of new legislation, like MiCA (Regulation 2023/1114) for crypto-assets markets, and DORA (Regu - lation 2022/2554), which imposes information and communication technology (ICT) obligations across the financial sector. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models Fintech companies cover various business mod - els, dominated by payment (eg, mobile-based payment services, QR codes, payment terminals or models combining affiliate marketing with philanthropy), personal finance and savings (eg, income and expenses monitoring, buy now pay later or pay anytime solutions) and accounting and cashflow verticals (eg, automated account - ing, online invoice financing). Cryptocurrency platforms (eg, exchanges, trad - ing or savings) and online broker verticals (main - ly comparators and insurance and other financial products intermediaries) are also very popular. These, along with the investment verticals, wel -
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