The Baltic States, consisting of Estonia, Latvia, and Lithuania, have made significant strides in digital development in recent years. With a combined population of just over six million, each country has leveraged its small size and flexibility to create a conducive environment for innovation. As such, the region has become a hub for tech start-ups and digital solutions, particularly in the areas of FinTech, cybersecurity and iGaming – where it has carved a definitive space out of a saturated market in which leading iGaming platforms utilise promotions to attract new customers. Despite increasing competition from Big Tech, the Baltic states continue to push for innovation to solidify their position as leaders in the digital arena.
A New Hub for FinTech in Lithuania
Of the three Baltic States, Lithuania has emerged as a key player in the digital development landscape thanks to its substantial investment in technology infrastructures. Consequently, the country has attracted a significantly high percentage of start-ups and tech firms in recent years, particularly in the field of FinTech.
FinTech, a portmanteau of finance and technology, is a blossoming sector that disrupts traditional financial systems by combining tech and innovation with financial services and solutions. It now encompasses a wide range of applications, from eWallets and mobile payment apps to cryptocurrency. FinTech is of particular relevance here in the digital age as it has revolutionised and democratised the way that global consumers manage their money.
According to a report by Invest Lithuania, the number of FinTech companies in Lithuania has tripled over the past five years, and the sector now employs over 3,500 people. The country's FinTech success can be attributed to several factors, not least of which is a highly skilled workforce and an education system that puts a strong emphasis on STEM subjects.
Furthermore, the Lithuanian government has been proactive in creating and maintaining a supportive environment for start-ups in order to attract foreign investment into the country. Initiatives like the Start-up Visa program and the Lithuanian Business Angels Network have made the region increasingly attractive for entities seeking low overheads and start-up costs while still being in a prime position to access both Western and Eastern European markets.
Lithuania is also proving to be a key player in the continued growth of the cybersecurity industry, even becoming a centre of excellence recognised by global start-ups. Invest Lithuania's statistics indicate that to date, over 100 cybersecurity companies have been established in the country, supporting a workforce of over 3,000 people.
An Epicentre for Digital Development in the Baltic States
While Lithuania is making waves in FinTech and cybersecurity, Estonia and Latvia are also having a significant impact on the growth of innovation in the region. All three states are contributing to the creation of an epicentre for digital development.
Estonia, in particular, has been a trailblazer in the creation of new digital markets. It has made significant strides in the integration and normalisation of blockchain technology, applying it in various use cases, including in the creation of the world's first e-residency programme. This cutting-edge programme utilises blockchain tech to provide secure digital identities to non-residents.
Estonia's application of blockchain tech also powers the infrastructure of its e-government solutions, with initiatives like the X-Road platform and the Digital ID card enabling citizens to access a number of core services relating to healthcare, banking, business and more online.
Conversely, Latvia has also been focusing on developing a start-up ecosystem, investing heavily in establishing the right infrastructure to incubate and support start-up firms. Latvia's Start-up Law and its own Start-up Visa programme are fast becoming as popular as Lithuania's among entrepreneurs in emerging tech sectors. Furthermore, Latvia has been attracting impressive amounts of investment, with several venture capital firms setting up operations in the country.
eCommerce is another burgeoning sector in Latvia, having grown by 25% over the past decade. The country's location and EU membership make it an attractive location for cross-border eCommerce, with the likes of Zalando and Amazon establishing a presence in the region. Meanwhile, local eCommerce platforms Kurpes.lv and 220.lv have gained popularity thanks to government initiatives that support the development of the sector in the country.