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Estonia is the Thriving Fintech Hub of Europe

In recent years, Estonia has emerged as a powerful natural force in the European fintech landscape, capturing attention and acclaim for its innovation, digital prowess, and forward-thinking approach to financial technology.

Hundreds of fintech startups following the success of three unicorns in the sector, Estonia continues to unfold a series of pleasant surprises within the realm of financial technology.

With its strategic investments in digital infrastructure, progressive regulatory environment, and a culture that embraces technology, Estonia has carved out a prominent place as the fintech hub of Europe. This New Nordic nation has created a fertile ground for fintech startups developing advancements reshaping the financial industry.

Estonia leads Europe in fintech unicorns per capita

In terms of fintech unicorns per capita, Estonia is the clear leader in Europe, with 2.3 fintech unicorns per million capita. Three Estonian fintech unicorns – Wise, Glia and Zego – are taking the most significant slice of the Estonian unicorn pie of 10 unicorns in total, making fintech unicorn production probably the most successful business in Estonia.

“Per capita, Estonia always wins,” says American entrepreneur Ross Mayfield. When it comes to founding startups, growing billion-dollar worth tech companies, and raising money, the small size of Estonia is far from being an issue.

Once again, Mayfield is right. When it comes to fintech unicorns per capita, Estonia’s leadership outshines other highly productive European countries, including the United Kingdom, Germany, France, and the Netherlands.

Per capita or not, even the benchmark of producing five per cent of 61 European fintech unicorns is remarkable to spark interest in the Estonian fintech sector and discover what makes Estonia the new fintech hub of Europe.

The digital nation

The influence that has propelled Estonian tech companies into the global spotlight stems from the country’s history. Three decades back, when Estonia succeeded to restore the country’s independence, the whole country needed to build from scratch. The financial sector was no exception.

Estonia took the need to rebuild the republic as a challenge. It used the modern digital ways of the 90s to build an easy-to-maintain, optimally staffed, and cost-effective system for the country of 1.3 million people.
Estonia’s fintech journey has its roots in the visionary concept of e-Estonia, where the government, financial services, and telecom providers joined forces to create a unique environment.

Digital service delivery was supported by the development of electronic ID, high-speed connectivity, and enabling legislation. Nordic banks, through local subsidiaries, were early beneficiaries and continue to profit from efficient digitalised processes and agile business models.

Estonia has the world’s best tax system

One of the great examples is Estonia’s e-tax system which is considered the world’s coolest and simplest.

“Estonia’s success comes in two parts. Estonia was the first post-commie country to adopt a flat rate income tax in 1994, adopted later by a number of countries as well,” says President of Estonia (2006-2016) Toomas Hendrik Ilves.

“A simplified tax system led to a major boost in compliance even with a paper-based system. The second step was to offer digital filing of income tax, which turned filing into a three to five-minute operation, since all taxable income, as well as deductions, were pre-filled,” Ilves also notes.

Today, Estonia is a cashless society, with over 99 per cent of financial transactions occurring digitally. Since 2000, individuals have been electronically declaring their income, and online declarations have accounted for over 99 per cent of all submissions.

Estonian efforts here have not gone unnoticed. The Tax Foundation has highlighted Estonia’s tax system as the best in the OECD. And not once, but nine years in a row since 2014. With no corporate income tax on reinvested profits, no capital tax, and no property transfer taxes, Estonia’s transparent and simple tax system continues to attract investments and boost the economy, including the fintech sector.

Blooming fintech sector

Estonia’s journey of innovation has led its companies to develop solutions that prioritise innovation, user-friendliness, and safety in the fintech industry. The country’s widespread adoption of Electronic ID and Blockchain technology has further strengthened its position in this field.

All the innovation is possible due to the rich talent pool of skilled tech people Estonia has. Estonians are encouraged to become techies – kids have programming lessons already in primary school, and building bitcoin apps is being taught in selected high schools. So, whatever the challenge in finance, Estonians find a tech solution for that.

With 193 fintech companies, including notable players like Wise and Guardtime, Estonia has become a global hub of excellence for fintech. Glia, headquartered in New York City but with Estonian roots, is also revolutionising customer services in finance, spreading Estonia’s digital-first mindset worldwide.

Monese provides mobile-based banking services, while Fairown enables tech giants like Apple to offer products as services. Zego is driving a digital revolution in the insurance sector, and Salv again is actively combating financial crimes. Xolo helps freelancers around the world set up and run their own micro-enterprise.

The Estonian fintech sector is abuzz with these exciting developments, demonstrating the country’s commitment to pushing the boundaries of financial technology.

Interested in investing in Estonia, a global centre of excellence for fintech? Just send Invest Estonia a request for e-consulting and get started!

Introducing Invest Estonia

Invest EstoniaInvest Estonia is an organisation that plays a vital role in promoting Estonia as an attractive investment destination. Its primary objective is to facilitate and support foreign direct investment (FDI) in the country.

Invest Estonia offers a wide range of services to potential investors, guiding them through the investment process and providing valuable insights into Estonia’s business landscape. The organisation offers personalised investment consultations, providing information on market opportunities, sector-specific expertise, and advice on available incentives and support measures.

Invest Estonia fosters collaborations between foreign investors and local companies, helping to establish mutually beneficial partnerships and facilitating access to Estonia’s innovation and technology-driven ecosystem. It also supports investors in navigating the legal and administrative procedures, connecting them with relevant authorities and stakeholders.

Invest Estonia’s efforts have also been instrumental in attracting numerous international companies to set up operations in Estonia, contributing to the country’s economic growth and job creation. Through its proactive approach and comprehensive support services, Invest Estonia continues to strengthen Estonia’s position as an investment-friendly destination and a hub for innovation and entrepreneurship.


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