Bank or fintech: five European companies that the market is undervaluing
Swedish Klarna's valuation on multiples has shifted toward classic banks. This is not the only European fintech that investors are valuing cheaply. Photo: appshunter.io / Unsplash
European fintech companies are showing double-digit revenue growth, but investors still value them significantly below their U.S. counterparts - at the level of conventional banks or financial organizations. Why is this happening? And which European fintech companies should you pay attention to?
Why Europe is rich in undervalued fintech
Now the 50 largest public companies in the world are worth $3.7 trillion. About 96% of the total market capitalization is accounted for by companies from the United States. European fintech companies are also on this list, but they are in the minority. Overall, Maordor Intelligence estimates that the European fintech market will grow in revenue by about 15% per year over the next six years, and by 2031 it will reach $195.4 billion.
Almost all fintech segments in Europe are undervalued, says Olek Skvarchek, founder of the analytical platform Multiples.vc, to Oninvest. On average, the discount of European fintech to its American counterparts is 30-50%, the expert estimates.
European fintech is mostly strong in the B2C segment, and perhaps even more innovative than in the US. For example, neobanking is very strong in Europe - just think of Wise, Revolut, Monzo and others.
As noted by the European Central Bank and the European Parliament, the eurozone financial system is still largely bank-centric, unlike the United States. There, the capital markets-based model dominates.
Sam Boboev, founder of the analytical project Fintech Wrap Up, gives another reason. In a commentary for Oninvest, he explains that European regulators are usually quite strict about the classification of financial organizations. A bank, an electronic monetary institution (EMI), a payment organization, a cryptoasset service provider - these are all different categories with different responsibilities, reporting and supervision requirements.
"This distinction in practice is very important because regulation directly shapes the economics of business," Boboev reasoned.
Because of this, many fintech companies look like software platforms on the outside, but a substantial part of their revenue is tied to financial activities - net interest income, deposit monetization or interbank fees. These revenue sources are highly dependent on, again, regulation and macro cycles.
Therefore, investors prefer to evaluate a fintech company through the prism of capital adequacy and risk control system. This naturally pulls the valuation [down] towards the multiples of regulated financial institutions, i.e. banks.
Software businesses, including fintech, are typically valued at higher multiples because they scale at relatively low marginal costs. And businesses that need regulatory capital and balance sheet funding offer lower returns on additional capital, which limits their valuation multiples, Sam Boboev explains.
The multipliers are giving away
Multiples.vc on its platform calculates two important multiples for fintech valuation: the EV/Revenue ratio, which shows how much annual revenue the market values a company at, and EV/EBITDA, which shows how much annual earnings before taxes, interest, depreciation and amortization investors are willing to pay for a company.
The same is true for classic banks. As Oninvest has written previously, European banks are trading at nine times earnings for 2027 and show an average return on equity of around 16% and a total "return to shareholders" of around 9% per year, including dividends and buybacks. This translates into single-digit multiples to earnings and a valuation just above equity (P/B) that looks cheap against the rest of the European equity market.
In deals with private fintech companies, the median multiples were around 4.7 to revenue and around 11-13 to EBITDA by early 2025, depending on the bank's segment. According to Olek Skvarchek of Multiples.vc, the situation is pretty much the same now. In other words, where the financial platform and infrastructure are concerned, the market is on average prepared to pay several times more for each euro of turnover and considerably more for each euro of profit.
Which European fintechs are worth looking at
Out of nearly a hundred public European fintech companies, Oninvest selected for analysis five public companies that disclose a comparable set of metrics (portfolio growth, margins and multiples). The focus was on platforms that have been on the market for several years and demonstrate a sustainable business model, which makes them comparable to traditional banks.
Growth potential estimates are also provided for the top five companies. In fintech, it is best to look at revenue quality, margin dynamics, customer retention, operating leverage, and the company's ability to grow revenue from its existing customer base (i.e., scalability of the business), says Sam Boboev.
"I also pay a lot of attention to cost-to-serve dynamics because operational efficiency becomes critical when transaction volumes go to scale," adds the expert.
He also points out that the PEG ratio - which shows how fair the stock price is given the company's earnings growth rate - can also be useful for fintech companies, especially high-growth ones. They often have a market that values future expansion more than current profitability. A ratio value near one signals that the market is paying exactly for growth, above one - overpaying, below one - undervaluing.
The problem is that fintech growth is often tied to interest rates and consumer spending cycles, so PEG alone rarely provides a complete picture
- Sweden's Klarna is the flagship of the European BNPL (buy now, pay later) fintech. It went public in New York in September 2025.
Now the value of the business (EV) is $3.89 billion with a capitalization of $6.52 billion, and the EV to revenue ratio is just 0.99, the EV to EBITDA ratio is 5.52 (as of May 28). Back in December 2025, Klarna was trading at ratios of 1.2 revenue and 10.5 EBITDA, meaning its multiples have declined rapidly and "moved out of the sector" of fintech and into banking.
Klarna has a five-year PEG ratio of 0.13, which means investors value it cheaply.
- Hypoport is a German marketplace for mortgages, insurance and financial planning that earns mainly from commissions from banks and insurers rather than interest income.
The company's capitalization as of May 28, 2026 was €550.68 million and the value of the business was about €493.26 million.
EV/Revenue is now approximately 1.1 and EV/EBITDA multiple is 7.4. A year ago, these values were 1.5 and 11-13, respectively.
The PEG ratio for Hypoport is now 0.4.
- Ailleron is a Polish company specializing in digital banking and fintech solutions for banks and telecom operators. The company earns money from subscriptions to its platform, project support and a share in client revenue. It is traded on the Warsaw Stock Exchange.
Its capitalization is around PLN 200.65 million and its business value is PLN 330.04 million. The business value to revenue ratio is around 1-2, and the EV/EBITDA multiple turns out to be in the single digits - only at the level of 4.
For Ailleron, the PEG coefficient is 0.27.
- NEO Finance AB is a Lithuanian P2P lending platform and payment organization traded on the Vilnius marketplace. Its business combines a retail loan portfolio, payment services and an investment platform for individuals.
The company has a capitalization of €13.28 million and a business value of minus €13.77 million. The EV/Revenue multiple for the company is 1.4. The EV/EBITDA multiple is 5.9. Over the last three years, it has decreased 2.4 times.
The platform has a PEG ratio of 0.44. Thus, the market evaluates it as a small bank rather than a fintech marketplace with a potentially scalable model.
- Morrow Bank, Norway. The former Komplett Bank, although it has the word "bank" in its name, is now more of a fintech platform headquartered in Lysaker near Oslo with operations in Norway, Sweden, Finland and Germany.
The "bank" has a capitalization of about SEK 3 billion. Morrow's management declares a focus on a ROTE (return on real equity) of around 20% from the current 13.9% and double-digit portfolio growth by 2028.
Value of Business to Revenue (EV/Revenue) is 2.1, Multiples.vc predicts the multiple will drop to 1.5 in 2028.
The EV/EBITDA multiple is in the neighborhood of 0.7-0.8, according to the reporting data as of the end of Q1 2026. At the same time, the PEG ratio is 0.5. As a result, the market still values this digital bank at the level of classic banks.
This article was AI-translated and verified by a human editor
