The Baltic region, which includes Estonia, Latvia and Lithuania, is experiencing rapid growth. A fintech hotspot at the forefront of digitalization and developing technology infrastructure. In this week’s spotlight, Lena Hackeroel CEO and Founder of bright payment explains why geography is important for instant payment companies.
Back in November, Brite Payments expanded its reach to offer full product coverage across the Baltic region after successfully launching its instant pay-in solution in Estonia. The company currently offers instant pay-in and pay-out products in Estonia, Latvia and Lithuania.
Fintech Times recently caught up Hackeloar We discuss her thoughts on the Baltics, the second-generation challenger’s plans for 2023, and moving fintech forward in the next 12 months.
Lena, why have the Baltics become the focus of Brite Payments’ expansion?
Since the launch of Brite in 2019, we’ve had our eye on the Baltics. During that time, there has been a significant increase in the adoption rate of digital payment solutions. We have also seen the region establish itself as a true European tech and fintech hub. This is home to many unicorn businesses, including his Skype, which has forged its own legacy in the “new Nordic” tech scene.
The Baltic region is at the forefront of government-led development of digitalization and technological infrastructure. As a result, the region is already very comfortable with digital channels and has a strong adoption of digital payments. This makes Baltics a perfect fit for companies like Bright, as consumers are already accustomed to adopting new digital technologies and ready to accept convenient instant account-to-account payments.
In addition, there have traditionally been strong links between Nordic and Baltic businesses. This is essential as no single market in the region ranks among the largest in Europe. At Brite, we share the general view that cross-enterprise collaboration helps drive scalability. This is another reason why we have launched our business and products in the Baltics. It felt like a natural next step for us.
How is the adoption of digital payments in the Baltics compared to some of the larger European markets?
Convenience is the number one factor driving demand from consumers. The high digital affinities of Baltic consumers, along with well-established digital national identification schemes, allows for the creation of highly convenient payment experiences that help drive adoption.
Whether you’re a merchant or a consumer, the benefits of instant payments, including the convenience factor, are clear. Primarily, these solutions reduce delays during payment initiation, clearing, and settlement, allowing funds to move more quickly from one point to another. It is these benefits that appear to be driving consumer adoption. With more online purchases being made now, it’s good to know that money can be processed instantly.
Adoption of these solutions in the Baltics is already fairly high, surpassing the major Eurozone economies, especially Germany, which are still heavily dependent on cash. However, the region lags behind neighboring Nordic countries and the United Kingdom. In general, however, Europe continues to “leap” to developing markets such as Brazil and India when it comes to adopting instant payments. This is largely due to the entrenched nature of card payments across Europe.
What else can be done to accelerate open banking-based payments innovation?
I’ve talked before about how Open Banking, and more specifically Open Banking-based payments, can be improved across Europe, and many of these points still hold true today. There are too many API standardization issues affecting the quality of open banking services. Similarly, it’s time for the industry to move away from unfair service level agreements between service providers and traditional financial institutions.
These are areas that require immediate attention. More broadly, we hope that further efforts will be made to improve the reliability of accessing the infrastructure required to complete payments. At the time of this writing, outages and service downtime are still all too common and a major impediment to further adoption of open banking-based services. Ultimately, this will need to be addressed as more people begin to rely on these systems.
Besides the successful expansion in the Baltics, what are Brite’s other highlights or milestones in 2022?
This year has been a very busy year for Brite. We are proud to have reached many milestones in the last 12 months. Let’s start with the launch of convenience-focused single her signature products. Just look at the buzz this launch has sparked within the industry to understand its impact. With Single Sign-on, a customer can make a payment from their bank account with just one authentication step for her.
We are also proud of the quality of partnerships we have built into 2022. A standout is our partnership with European payment giant SOFORT. In April, we joined forces with the company to launch our European Instant Payout partnership. In the new partnership, SOFORT’s comprehensive bank transfer offering will be complemented by Brite Instant Payouts.
“We have entered difficult economic times, and unfortunately this situation is likely to grow in 2023. In the fintech sector, this will always slow down investment and make it difficult to raise capital. It gets even harder.”
Most of all, we are most excited about this year’s growth. By 2022, he has more than doubled the company’s headcount. Likewise, he doubled the number of transactions he processed. This increase is expected to continue after the full launch of Baltics. It is incredible to support this expansion by hiring a large number of talented and influential people who bring rich payouts and fintech experience to the mix, another big highlight of the year. .
What’s in store for Brite in 2023?
We look forward to building another year in 2022 with incredible growth, new products and exciting partnerships. In addition to continued geographic expansion, we plan to further expand our product portfolio and build our future developments on the PSD2 API. At the same time, as the number of customers and users we serve continues to grow, we continue to build several key capabilities within our business.
What are the predictions for fintech in 2023?
We have entered difficult economic times that, unfortunately, are set to grow into 2023. In the fintech sector, this will always slow down investment and make it even harder to raise capital. Additionally, many investors are interested in companies that can show a clear path to profitability, possibly at the expense of innovation.
A recession will have broader implications for the payments sector. Even payment-focused fintechs that receive funds will likely have to reassess their growth plans.
When the economy generally shrinks, merchants in many industries will scale back and assess their spending more closely. On a more positive note for some fintechs, cost-effective payment solutions such as A2A payments fall perfectly into this category, offering cost savings at a critical time while addressing merchant pain points. help alleviate.
How will Fintech move forward in 2023?
By definition, fintech is subject to regulation, but this varies greatly depending on where you operate. As a result, there is now a competitive imbalance across Europe, with some markets being more heavily regulated than others. This can affect how products are built and their appeal in different markets. I am not advocating the need for deregulation. Rather, it argues that by leveling the playing field and increasing regulatory consistency, markets will be easier to expand. It will also allow European fintechs with strong product offerings to scale.
Harmonization of regulations at the supranational level would help. Personally, I think it’s time for the European Union to start working to balance the playing field in this important area.
Moreover, PSD3 should start taking shape in 2023, which will give us an idea of how the revised Directive will address some of the current issues. For example, it will mandate greater uniformity among the APIs banks use to support open banking solutions, ultimately improving the customer experience. The recent EU proposal to mandate immediate payments is also important, and many fintechs, including Brite, are watching closely how this develops.
Moving fintech forward in 2023 will also require significant impetus to attract talented people to the sector. Fintech companies are competing for top talent and maintaining a vibrant ecosystem. Attracting new talent with fresh and exciting ideas is important. Fortunately, fintech is a very dynamic and fast-moving sector, so we believe we are well-positioned to attract top talent to our ranks.