French junior minister Cedric O told fintech entrepreneurs on Monday to stand up to “big tech”, and work hand in hand with well-established banks to keep Europe in the race for finance innovation.

“Developing new technology in the financial sector is a matter of being able to compete on the global stage, but it’s also a matter of sovereignty,” O said in a speech at the opening of the Forum Fintech, attended by entrepreneurs, banks and regulators in Paris. “We need to succeed, or even our democratic sovereignty will be in danger.”

The Covid-19 crisis has reinforced the position of technology giants like Apple and Microsoft on the global stage, but O said they could eventually dominate the financial sector too given the amount of data they’re collecting on Europeans.

Indeed, banks and fintech are in danger of being cut out of the value chain, he warned. 

“There’s a huge intermediation risk for French banks and for fintechs — that’s why Europe needs to spawn its own innovative players.”

He added that collaboration would be the best defence:

“France needs to be at the avant-garde of the digital revolution…But we have to work on transforming the entire sector — I don’t think startups can just replace all traditional banks.”

The minister also warned that falling behind in areas like payments and cryptocurrencies could have even particularly dire consequences, suggesting that failing to keep up with innovation there could go so far as to impact democracy.

“What’s more sovereign than a currency?,” O asked.

On a brighter note, French fintechs raised €700m in 2019, which is twice as much as the year before.

While France is behind other countries, including neighbouring UK, the boost in funding could be a sign the country is catching up, O said.