Page 12 - FintechAtlas2019

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Baltic States
Small countries with international solutions
Skyline of Tallinn, Estonia Kaido Saar, Fintech Area Head of FinanceEstonia
The Fintech Area Head of FinanceEstonia, Kaido Saar, explains why startups from Baltic States meet international requirements right from the start.
What is on the current agenda of FinanceEstonia
in the area of digitalisation and fintechs?
Saar: FinanceEstonia is a financial sector cluster organisation rather than a business entity. But we don’t consider “digitalisation” itself to be a top topic in Estonia. In general, everything is already digital so there’s little need to either digitalise as such or talk about the subject. Rather, there are more specific digital questions: What will consumers need in future and how should they be served, how do we build more user-friendly solutions and how do we do this seamlessly and ensure the security of data and processes? Efficient cyber security and anti-money laundering measures are definitely issues right now.
How would you describe the fintech ecosystem in Estonia/in the Baltic States?
Saar: Firstly and most importantly, Estonia and the other Baltic States are small countries. Hence, the technology created
by our startups is meant to be international. As local markets are small it isn’t worthwhile creating technology just for local people. The result of this is well-planned architecture that is suitable for international operations. In comparison, startups in countries with large markets often focus on their own consumers and create technology that later proves less suitable for cross- border expansion.
Estonia has developed extensive know-how since creating and accelerating Skype and also has the biggest number of unicorns. Today, this know-how can be found in our flagship TransferWise and countless smaller fintechs. Latvia and Lithuania have also developed in this field. The Lithuanian Government and Central Bank have worked hard attracting foreign fintechs and the country is now home to Revolut’s hub. Estonia has a strong startup community that benefits from the know-how developed creating previous unicorns.
What were the main developments in 2019
regarding PSD2?
Saar: Banks built their APIs and eventually released new versions. But we don’t see strong use of APIs as solutions for customers. Rather, criticism has been heard on the market that PSD2 is not good enough due to an unclear standard that limits real Open Banking and doesn’t allow consumer-friendly solutions. One positive development, however, is that some banks have started to show account information from other banks.
Which local fintech would you highlight as making
the best use of PSD2?
Saar: It could even be that the banks are the biggest winners. A bank showing also the data from another bank might be very popular amongst its customers. Other winners are fintechs that provide authentication services.