Estonia has many record-breaking stats, yet the growth of its FinTech industry stands out. With 2.3 FinTech unicorns per million per capita, Estonia is a leader in Europe, producing 5% of 61 European FinTech unicorns. Where does this success stem from? It all comes back to the strongest pillars of Estonia, argues The FinTech Report Estonia 2023 reported by Invest in Estonia.

Estonia’s FinTech success is attributed to two main resources: technology and people. The digital infrastructure in Estonia is advanced, and the government encourages digital innovation. Besides, the younger population is attracted to the possibilities of technology, making IT-related careers and education a popular choice. The majority of respondents marked the use of blockchain, Big Data Analytics, AI, or Open Source Computing (APIs). In addition, cybersecurity and automation/robotics have been used as well.

Estonia’s FinTechs have increased their capabilities in providing products and services on a B2C or B2B basis. The most frequent services are digital asset exchange, digital lending, enterprise technology provisioning, digital payments, WealthTech, and digital capital raising. Additionally, most Estonian FinTechs have an international outlook – 72% operate both locally, in Estonia, and worldwide.

At the end of 2022, there were 264 FinTech companies registered in Estonia – a 23% increase compared to the end of 2020. And with reaching €400M in 2022, there has been a 42% increase in income compared to the previous year.

But what do people working in FinTechs themselves value about Estonia? When rating different factors, the ease of establishing a company and good quality digital infrastructure are valued the highest. Although the results were quite similar to the ones in 2021, they have witnessed stability in Estonia’s FinTech sector over the recent years.

FinTechs are putting a great emphasis on Estonia’s reputation, knowledge of the local entrepreneurial environment, regulatory clarity, availability of skilled workforce, and no-corruption business culture.  The world’s best tax system (with 0% corporate tax on retained and reinvested profits), e-services, startup ecosystem, and personal network have been seen as the decisive advantages of Estonia’s business environment for finance technology companies.  With, on top of that, the support from the government.