Page 11 - bne_Tech_07_2020

Fintech & E-commerce
July 2020 www.intellinews.com I Page 11
in terms of fintech investments in 2019. But commercially, not too much negative sentiment is indicated here either. Over 75% of the accumulated regional fintech financing (2008- 2019) by investors is still concentrated in the Polish and Russian markets. This speaks for the maturity of the respective fintech scenes there and is also related to the fact that over 60% of the digitally active population in CEE is concentrated in Poland and Russia. However, it is also clear that the other growing and smaller CEE fintech markets may well be interesting for early-stage investors.
The RBI CEE Fintech Atlas also clearly shows that the innovative power in CEE is very high. A country such as Estonia has twice as many locally active fintechs than a country like Austria. The fintechs located there have been provided with financing that is three times higher than for fintechs in Austria. It is therefore a clear objective of the study by RBI to bring together fintechs from CEE with investors and banks from Western Europe
or to whet the appetite of Western European investors for the CEE region.
On top of analysing the regional fintech dynamics it is equally important to get a grip on the size of the (potential) customer base of digitally active and sophisticated customers in the CEE region.
More than 65% of the population in the CEE markets is expected to be using digital banking services by the end of 2020, an increase from some 50% some 2-3 years ago. That said, the digitally active customer base in the region may reach the 200mn mark as of 2020. As there is room to increase the digital penetration in the
region by some additional 5pp per annum, we expect strong growth in the digital banking space in the years ahead.
Still, a large chunk of the digitally sophisticated customer base is sitting in a few markets – as shown earlier. Therefore it remains key that local fintechs and regional CEE banks remain open to implement scalable solutions together across several markets – due to the small size of many CEE markets. With the possible exception of Ukraine, the number of digitally active customers in all other CEE markets remains below 10mn,
in seven markets even below the 5mn level. However, Western banks are sitting on relatively high market shares of 60-80% in some of those smaller markets, which makes them attractive partners for local and/or international fintechs. Moreover, it is not only the outlined market conditions in many CEE countries that suggest partnerships between banks and fintechs. The coronacrisis has resulted in the resurgence in importance of lending products – still the domain of banks – while it has also removed hurdles with which banks and large corporations traditionally encounter digital approaches.
We currently see a digital catch-up running at full speed due to very specific crisis circumstances. Customer behaviour is radically changing: the willingness of customers to only engage digitally has increased radically, while large parts of the economy have been brought online. Therefore
the number of digitally active customers in the CEE region may continue to rise by 5 percentage points in the years ahead, and top 80% in a few years' time, pushing the number of digitally active customers to a level of roughly 250mn.