Life in Estonia artikkel: “Estonia leads the way in financial innovation”

Artikkel ilmus esmalt: Life in Estonia, No 58 (1/ 2022)

Without a big fuss, Estonia has become a leading FinTech hub, already home to three FinTech unicorns.

The development of Estonian FinTech companies has been promoted by a strong FinTech ecosystem. The ecosystem is based on the companies of the sector, the strong local entrepreneurial culture and digital infrastructure. Estonia is attractive for FinTechs for several reasons:

  • excellent state e-services and their accessibility
  • the simplicity of creating new companies
  • e-Residency
  • qualified workforce
  • entrepreneur-friendly regulations
  • the ease of raising capital.

10 unicorns have grown in Estonia on this foundation, making it the largest number of unicorns per capita in the world. Among them are three FinTechs: Wise, Zego and Veriff. But Estonia has even bigger ambitions for the near future – 25 unicorns by 2025!

Estonia can already boast several ambitious and promising startups in this sector – ChangeEveryPay and Salv, just to name a few, as well as already established companies like EstateguruFunderbeam and Guardtime.

In order to reach this goal and continue to improve the ecosystem, it is important to proceed in a strategic way. This brings us to FinanceEstonia, the representative organisation of Estonian financial sector companies, which recently celebrated its 10th year of activity; the organisation incorporates members from the public and private sector as well as banks and legal offices. “Through our members, it is our goal to support the development and innovation of the financial sector. It is also our aim to create development opportunities and to support an economic environment which is free of excessive restrictions, which would help promote activity on international markets and create new jobs in the finance sector,” said Anu Müürsepp, Managing Director of FinanceEstonia.

The activities of FinanceEstonia focus on the development of the Estonian financial sector through six focus areas. Six working groups meet regularly: Capital Markets, Credit Providers, Crowdfunding, FinTech, Funded Pension, and Sustainable Finance. Each working group has its own leader and goals.

When we speak of Estonia as a growth setting for FinTech, the creation of an ecosystem may be invisible from the outside, yet this is an area of targeted activity. For example, FinanceEstonia is helping to create Estonia’s FinTech strategy. “It is first and foremost important to consider which sectors are producing high added value in the economy and offer the highest salaries. Two fields always stand out in this respect – IT and financial services. Afterall, FinTech is nothing but the combination of those two. This is the reason why we need a FinTech strategy in Estonia – having one will help us to map the opportunities and bottlenecks of the sector and to set development goals accordingly. It is even more important to create a concrete plan of activity with main contributors in order to achieve those goals,” explained Anu Müürsepp. “When it comes to FinTech, Estonia has a very positive reputation abroad. This is a great value and unused potential. Many countries already have a FinTech strategy, but Estonia does not yet. For example, Switzerland, Luxembourg, Malta and also Latvia and Lithuania already have their own FinTech strategy.”

The FinTech working group is led by Taavi Tamkivi, Board Member of FinanceEstonia and CEO and founder of Salv, a startup that helps banks to fight financial crime.

Tamkivi says that Estonia has the tendency to turn problems into success stories. During the Russian cyberattacks of 2007 we created learning material for the rest of the world, making Estonia a front runner in educating other countries. Likewise, amid the money laundering scandals of 2017-18, we didn’t sit back but looked actively for ways to improve
the situation. Tamkivi’s Salv was created then. “We are used to talking about Estonia as an e-country and startup land, but now Estonia has also become a FinTech country,” says Tamkivi. “And by the way, we haven’t even knowingly advertised ourselves as such. We simply have so many amazing FinTech companies that word naturally spreads around.”

Research carried out in collaboration between Tallinn University of Technology and FinanceEstonia demonstrates that there has been rapid development in the Estonian FinTech sector in the last two years. According to the data from the end of 2020, the sector included 215 registered companies in Estonia with almost 2,000 employees, the volume of assets has crossed 1 billion euros, and profits amount to 235 million euros.

The landscape of Estonian FinTech is dominated by companies concentrated on: digital asset exchange, digital lending and digital payments. 64% of FinTechs were active internationally from the start and cover the USA, Europe, Asia as well as Africa.

By Ann-Marii Nergi