In recent years, the Baltic States of Lithuania, Latvia, and Estonia have gained a reputation in financial and technological circles as being somewhat of a fintech powerhouse. In 2017, the three countries were ranked by the World Economic Forum as three of the top seven most innovative countries in the European Union alongside the United Kingdom and Sweden.
Since 2014, the region, with its combined population of just over 6 million, has produced a number of fintechs, such as TransferGo (Lithuania), Mintos (Latvia), and Bondora (Estonia). The new trend in fintech is blockchain, and Baltic startups, such as Debitum, are now also integrating blockchain technology.
The Baltic States’ small combined population has worked to their advantage, and forced businesses issuing alternative finance to look beyond their borders at trends within global fintech markets as way of internationally expanding their business.
With Mintos scheduled to open offices in Brazil, Russia and South East Asia, and TransferGo and Bondora already operating from London, alternative lending providers from the Baltic States are rightly confident in their fintech services. Lithuania is especially convinced about its fintech infrastructure, and is tipped to become a European fintech hub as a consequence of the United Kingdom’s departure from the EU in March 2019.
The latest player on the Baltic alternative lending scene is Lithuanian P2P lending provider, Debitum Network, launched in September 2018. Unlike Mintos, which issues both personal and business loans, Debitum Network works for SMEs seeking the loans they require to cover short-term business essentials such as startup costs and cash injections. Contrary to its competitors, Debitum Network is blockchain-based and accepts fiat and crypto-currencies as methods of investments.
According to KPMG and Spanish bank, BBVA, blockchain is one of the major fintech trends of 2018 – its real-time updated digital ledger means it cannot be altered by external parties, whilst its lack of an intermediary means transfers can be made instantly. In the case of Debitum Network, loan applications can be assessed on the spot – meaning SMEs are able to quickly access funds.
“The finance world has acknowledged that blockchain technology is here to stay, and this is evident with major European banks such as BBVA, Credit Suisse, and SEB using it,” explained Debitum Network co-founder, Martin Liberts.
“As way of improving transparency amongst alternative finance providers, transparency-boosting KYC/AML procedures have been put in-place to maintain the popularity of alternative finance amongst SMEs. With banks gradually turning to decentralized technologies, it is important for alternative finance providers to adopt blockchain in order remain relevant to SME owners.”
The small market in the Baltic States has forced alternative finance providers to think global, and Debitum Network’s adoption of blockchain is clear of the region’s future fintech ambitions. With fintech trends for 2019 expected to become clear shortly, it is clear that the innovators of Lithuania, Latvia, and Estonia are likely to remain at the competitive end of the alternative financing market.