Estonia has gained prominence as a leading force in European fintech due to its innovative approach, digital infrastructure investments, progressive regulations, and tech-friendly culture.
As a result of its inventiveness, digital prowess, and forward-thinking attitude to financial technology, Estonia has recently emerged as a significant natural force in the European fintech sector.
With hundreds of fintech firms emerging in the wake of the success of three unicorns in the industry, Estonia keeps surprising everyone with new and exciting developments in the field of financial technology.
Estonia has carved itself a significant position as the fintech powerhouse of Europe thanks to its strategic investments in digital infrastructure, progressive regulatory framework, and a culture that embraces technology. This New Nordic country has produced a favorable environment for fintech companies creating innovations that are altering the financial sector.
In terms of unicorns in fintech, Estonia tops Europe
With 2.3 fintech unicorns per million people, Estonia is clearly the leader in Europe in terms of this metric. With three Estonian fintech unicorns—Wise, Glia, and Zego—taking up the lion’s share of the country’s total of ten unicorns, the development of fintech unicorns is perhaps Estonia’s most lucrative industry.
According to American businessman Ross Mayfield, Estonia consistently wins on a per-capita basis. The small size of Estonia is by no means a problem when it comes to starting businesses, expanding digital corporations worth billions of dollars, and raising capital.
Once more, Mayfield is accurate. Estonia’s leadership outperforms other highly productive European nations including the United Kingdom, Germany, France, and the Netherlands in terms of the number of fintech unicorns per population.
Whether measured per capita or not, the benchmark of producing 5% of the 61 unicorns in the European fintech market is impressive enough to generate attention in the Estonian fintech industry and help people understand what makes Estonia the new fintech capital of Europe.
The nation of digital
Estonia’s historical significance is what has brought its tech enterprises into the public eye on a worldwide scale. When Estonia successfully regained its independence three decades ago, the entire nation had to start from zero. There was no exception in the financial sector.
The need to restore the republic was seen as a challenge by Estonia. For the 1.3 million-person nation, it built an easy-to-maintain, optimally staffed, and cost-effective system using modern digital techniques from the 1990s.
The innovative idea of e-Estonia, where the government, financial institutions, and telecom providers collaborated to create a distinctive environment, is the inspiration behind Estonia’s fintech path.
The development of electronic ID, high-speed connectivity, and enabling laws aided the supply of digital services. Nordic banks were early adopters of efficient digitalized procedures and flexible business models, and they continue to profit from them through local subsidiaries.
The world’s best tax system is found in Estonia
One of the best examples is Estonia’s e-tax system, which is regarded as the coolest and easiest in the entire world.
“Estonia’s success has two components. According to Toomas Hendrik Ilves, the president of Estonia from 2006 to 2016, Estonia was the first post-commie nation to implement a flat rate income tax in 1994, which was subsequently copied by a number of other nations.
Even with a paper-based system, compliance increased significantly as a result of a simpler tax system. The second step was to enable digital income tax filing, which reduced the filing process to a three to five-minute process because all taxable income and deductions were pre-filled, according to Ilves.
Today, almost 99 percent of financial transactions in Estonia are digital, making it a cashless society. Since 2000, people have started electronically disclosing their income, and more than 99% of all submissions have been online declarations.
The efforts made by Estonia here have not gone ignored. The best OECD tax system, according to the Tax Foundation, is found in Estonia. Not once, but nine years straight starting in 2014. The open and easy-to-understand tax structure in Estonia, which has no capital tax and no taxes on the transfer of real estate, continues to draw investments and grow the country’s economy, which includes the fintech industry.
Expanding fintech industry
As a result of Estonia’s innovative path, its businesses have created fintech solutions that put innovation, usability, and safety first. The country’s position in this area has been further bolstered by the widespread use of Electronic ID and Blockchain technologies.
All of the innovation is made possible by Estonia’s strong IT talent base. Estonians are encouraged to pursue careers in technology; primary school students already learn programming, and some high schools also offer courses on creating bitcoin apps. Therefore, Estonians find a digital answer for any financial difficulty.
With 193 fintech businesses, including well-known names like Wise and Guardtime, Estonia has emerged as a leading fintech centre worldwide. The New York City-based company Glia, which has Estonian roots, is revolutionizing customer service in the financial industry and exporting Estonia’s digital-first mentality.
While Fairown enables digital behemoths like Apple to sell their products as services, Monese offers mobile-based banking services. In the insurance industry, Zego is leading a digital revolution, while Salv is once more actively pursuing financial criminals. Xolo assists independent contractors in setting up and managing their own microbusinesses.
These innovative initiatives are causing a flurry in the Estonian fintech market, highlighting the nation’s dedication to pushing the frontiers of financial technology.
Interested in making an investment in Estonia, a fintech hub of the world? Simply submit an e-consulting request to Invest Estonia to get going!
Please welcome Invest Estonia
An important part of promoting Estonia as a desirable investment location is played by the organization Invest Estonia. Its main goal is to encourage and facilitate foreign direct investment (FDI) in the nation.
Potential investors can choose from a variety of services that Invest Estonia provides, helping them through the investment process and giving them insightful information on the business environment in Estonia. The organization provides individualized investment consultations that include market opportunity analysis, industry-specific knowledge, and guidance on relevant incentives and support mechanisms.
In order to create mutually advantageous relationships and to make it easier for foreign investors to access Estonia’s innovation and technology-driven environment, Invest Estonia promotes partnerships between foreign investors and local businesses. By putting investors in touch with the appropriate authorities and parties, it also assists investors in navigating the legal and administrative processes.
A large number of foreign businesses have established operations in Estonia thanks in large part to the work of Invest Estonia, which has helped the nation’s economy expand and create jobs. Estonia’s reputation as a country that welcomes investment and a center for innovation and entrepreneurship is being strengthened by Invest Estonia’s proactive attitude and wide range of support services.