The next wave of fintech innovation might happen in Baltics
Jevgenijs Kazanins, Luminor Head of Daily Banking products
The Baltic States are an exciting place to be now if you are in financial services! If previously, one would think of New York, London and Frankfurt, as the hubs for financial innovation, then the next wave of innovation might actually happen in our region, and here are a few arguments to support that:
First of all, the Baltics States are becoming a concentration hub for FinTech companies. Some of the FinTech companies with Baltic routes are not only successfully competing on the international scale, but define the agenda of innovation in many areas. Money transfers, peer-to-peer lending, application of blockchain in financial services are few areas, in which Baltic FinTech startups excel at. The concentration of FinTech startups is only expected to intensify, as the combination of forward-looking regulation, availability of financial and technical talent and funding, as well as passporting opportunities across the EU make the Baltic States an attractive starting base for both existing and yet to be established FinTech startups.
Secondly, when speaking about the innovation in financial sector, one should not forget the banks. Commercial banks in the Baltics have always been the front runners of digitalization and now they are fully embracing mobile and Open Banking. Openness of the society to digital services, higher business flexibility arising from smaller scale, as well as limited heritage of legacy systems and processes, allow Baltic banks to deliver innovative solution at extremely fast pace. As opposed to some of the bigger markets, technological innovation in the Baltic banking is not a PR stunt, but rather a tangible and comprehesive delivery of digital solutions to a wide customer base.
Finally, the regulation is finally expected to put the consumer into the driving seat. Data portability and opening up of historically closed ecosystems, will simplify the processes of choosing the products and services that better suit the needs of the consumers, rather than the service providers. The change in the perspective will most likely take time to reach a scalable effect, yet, it will eventually affect both banks and existing FinTechs, as more players are expected to join the ecosystem and the consumers might eventually choose to move their business to non-trivial directions (i.e. telcos, mobile phone vendors or even social networks).
So what shall we expect in the nearest future? Will we see a fierce competition or friendly co-operation between banks and FinTech companies? Will FinTechs deliver on their promises of replacing banks or will the banks achieve their dreams of becoming FinTechs? Whatever is coming, one thing is sure – we are about to enter the golden age of innovation in financial services, and this time it will be about putting the customer needs first, and this time the revolution might actually start in the Baltic States.