Technological development affects all areas, including financial. Fintech (Eng. FinTech, financial technology) is a new dynamically developing area that offers technical solutions in the field of financial services.
After the collapse of the Soviet Union, the former member countries chose different ways. The Baltic States became members of NATO and chose a completely different orientation. They also emerged in fintech and Estonia, in particular, became one of the leading countries in Europe in this regard. In addition, Georgia has shown significant development in fintech, and in this article we will talk about these countries.
Georgia’s emergence in fintech
Fintech is becoming increasingly important for Georgian financial institutions, influencing almost all types of financial activities and capital management.
Currently, there are more than 7.7 million active debit cards in Georgia. On average, credit card turnover rises 12% annually.
Operations with payment cards
The number of transactions with payment cards increases annually by 20%, the volume – by 8.5%. In January 2018, more than 16.5 million operations were registered in the amount of more than 1.5 billion GEL.
Card transactions of resident and non-resident commercial banks
In January 2018, almost 16 million operations were performed using payment cards of resident banks (annual growth of 12%) by 1.4 billion lari (growth of 11% per year). In addition, 579 thousand transactions with cards of non-resident commercial banks (compared with 565 thousand in January 2017) were registered in the amount of 1.3 million lari (a year earlier this figure was 20.7 million).
The number of Internet transactions in January 2018 increased by 40% and amounted to more than 2.1 million. At the same time, the volume of settlements decreased by 38.5% compared to the previous year, which indicates a decrease in the average purchase size.
In September 2017, QuickCash and the microfinance organization BIG signed a cooperation agreement to increase lending to small and medium-sized businesses using an online platform. So, in 10 minutes. BIG can evaluate the creditworthiness of a business without collecting documents or providing guarantees.
Georgia relies on fintech solutions in the payment industry
In the future, according to Kapitali a local financial outlet, Georgian banks will cede to fintech part of the local market. Today there are no state banks in Georgia. A few years ago, the development of the banking sector was recognized as a priority, however, banks are not considered a forge for making technological decisions. Recently, independent acquirers and providers, payment services, and electronic money issuers have appeared in the financial sector of Georgia.
According to George Keshelashvili, Georgia will retain the status of a country where legislation makes it relatively easy to launch payment projects. Expected penetration of payment plug-ins in various platforms and applications. Mr. Keshelashvili also said that Georgia is developing solutions for smart contracts based on the blockchain, which will simplify the process of office work.
Speaking about the prospects, Georgy Keshelashvili said that in the coming years the struggle for low-volume payments will continue, QR payments will occupy a leading position if by then they do not come up with something more convenient and cheaper. The importance of smart systems for ensuring data security will also increase.
What’s more, in 2019 Georgia’s TBC Bank became the best in the world in the mobile banking sector, which indeed is a unique achievement.
Estonia and success story of fintech
A small country in the Baltic States, Estonia since the 2000s began to actively implement the project of digital industrialization. Today, government infrastructure is experiencing numerous blockchain projects in the direction of smart government. The blockchain is actively used to optimize existing electronic developments. But blockchain can be viewed in two different directions, and the Estonian government is happy to accept far from all startups.
Fintech Projects in Estonia
For the first time, “Government Technologies” was used by Tallinn in 2015, and since then, Estonians have tried to develop several blockchain trends at once
In 2015, a unique project appeared, which many called electronic citizenship, but in reality, it involves the only residency. The acclaimed electronic residence allows you to start your own business in Estonia, open an account with a local bank, and use a digital signature in any transaction. Clients are provided with an identification card, which is also handed to citizens of the country, but it does not have a photo of the owner. The main advantage for the state is the ability to receive additional prospects and financial revenues to the budget. In addition, this step allows you to get new jobs in the country, and over time, the entrepreneur can even move to the state for permanent residence.
At this stage, e-Residency developers are working on introducing a distributed registry into the startup infrastructure. This issue is being addressed by a group of programmers led by Kaspar Korjus, a young but well-known manager who heads the Forbes list in the section “Technology and Money” among citizens under 30 years old. Not so long ago, Megan Smith, who worked as vice president of Google, called Korjus one of the top 20 developers in the field of digital technology.
Electronic wallet from LHV bank
LHV Bank began to study the benefits of a distributed registry, and in 2015 Cubber Wallet was born – an electronic wallet that enables instant transactions in euros. The project has wide geography, and even programmers from Ukraine took part in it.
Attitude to cryptocurrencies
In Estonia, Bitcoin is officially classified as a means of payment, and therefore it is not additionally taxed. But the position of official Tallinn regarding cryptocurrency is quite restrained. Only in 2015, the European Court recognized Bitcoin as a currency, and before that, the Central Bank recommended that citizens give up risky investments.
In 2014, the Estonian police demanded to close one of the sites where digital money was traded. Otto de Voogd, the founder of this Internet exchange, said that he was being watched by law enforcement agencies who want the site’s founder to provide them with the ID of all users.