Estonia has potential for next FinTech start-up, expert say

FEIF2014 parallel session 4: FINTECH

Estonia has potential for next FinTech start-up, experts say
FEIF2014 parallel session 4: FINTECH

Estonia has been a successful start-up country and it would not be a surprise if the world will see the next successful FinTech start-up from here, Rain Rannu, the founder of Fortumo said.

The FinTech market has been struggling from innovative products with banks using the same systems from 1960s. Nasir Zubairi, Principal of New Buckland said that capital market, where the real money is, has though seen a lot of investments into systems. However the SME and retail banking is not the case as there seems to be no sense in investing – the customers would not switch the banks and not much money is earned anyway, he said.

Rain Rannu, the founder of Fortumo added, that one must however look wider than just volumes. “It reminds me what everybody thought of iPhones at the beginning which were considered too expensive. But look what happened in 3-4 years. Do not underestimate start-ups,” Rannu said.

Rannu said that consumers do not care much about fancy technology, they want service that offers real value, such as TransferWise and SMS loans. “In our industry there is another new digital wallet every week but none of them has been able to attract any significant user base,” Rannu said.

One potential for innovation could be cryptocurrencies, such as bitcoin, Rannu suggested. In concept it is great – real-time transaction across globe, at zero cost; yet it is difficult to use on consumer level and has high cost in converting into “real money”.

Rannu said that he can’t see any reason why Estonia cannot have a successful FinTech start-up. Estonia has a lot of people who are not happy to work for big companies and the world practice has shown that they are the ones who create start-ups. Obviously you also need eco-system and capital. “I am optimistic and I do not see there is anything missing for success,” Rannu said. Zubairi thought however that Estonians are too reserved and there is a gap in marketing. “It might be useful to get these capabilities from overseas,” he said at the Finance Estonia International Forum in Tallinn.