Estonia

Part
01
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Part
01

Business Statistics: Estonia

Over one in three businesses in Estonia are sole traders or equivalents and nine out of ten businesses have less than 10 employees. There were 12,471 new businesses started in Estonia in 2018.

FINDINGS

  • Proportion of businesses that are sole traders or equivalents: 36.64% (2016)
  • Proportion of businesses with less than 10 employees: 90.52% (2016)
  • Proportion of businesses with less than 250 employees: 99.76% (2016)
  • Proportion of businesses with less than EUR 5 million in revenue: 98.05% (2017)
  • Number of enterprise openings in 2017: 12,471
  • The enterprise birth rate in Estonia in 2017 was 11.9%.

RESEARCH STRATEGY

The information for this research was derived from the Statistics Estonia and OECD websites. As the data provided by Estonia Statistics indicates the number of enterprises generating revenue over and under EUR 5 million, we have used the same; OECD does not provide this data. The proportion of businesses generating revenue under EUR 5 million is 98.05%. The proportion of businesses generating revenue under EUR 5 million is likely to be upwards of 98.05%. As Estonia is a small country with only 1.3 million people, it is likely that the number of companies generating revenues over EUR 50 million is minuscule, which is possibly why the revenue classification is limited to EUR 5 million.

CALCULATIONS

Proportion of businesses that are sole traders or equivalents

Number of enterprises with zero employees: 31,415
Total number of active enterprises: 85,737
Therefore, the proportion of businesses that are sole traders or equivalents: 36.64% (31,415/85,737)

Proportion of businesses with less than EUR 40 million in revenue

Number of businesses with revenue of EUR 5 million or more: 1,669
Total number of active enterprises: 85,737
Therefore, the proportion of enterprises with less than EUR 5 million in revenue: 98.05% (1- (1669/85,737))
Part
02
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Part
02

Co-Working Space: Estonia

While there is no publicly available information to fully answer the question, we've used the available data to pull together key findings: Workland (four locations) and Regus (four locations) are the only major co-working space providers operating in Estonia. Estonia is a relatively small country in terms of land area (around 42,000 square kilometers) and population (around 1.2 million), and there are no Estonian cities listed on the 2019 European Co-working Hotspot Index. Below is an outline of our research strategies to better understand why the information requested is publicly unavailable, as well as a deep dive into our findings.

CO-WORKING SPACE PROVIDERS IN ESTONIA

RESEARCH STRATEGY

To identify the number of major co-working space providers in Estonia, we first examined the locations listed on co-working databases such as Coworker, CoworkBooking, and Coworking.Coffee. As these databases include thousands of co-working spaces across hundreds of countries, it is assumed that they would provide a comprehensive list of active locations/providers in Estonia. The website of every provider listed on these databases was examined to identify the number of co-working spaces that they operate. Among the 15 providers examined, only Workland and Regus operate co-working spaces in at least three locations in Estonia. Spring Hub, LIFT99, Mobispace, Taru Viimsi, Hammerhub, and other providers operate one location only.
To ensure that every popular co-working space provider in Estonia has been examined, we next conducted a press search for articles that talked about co-working in Estonia. The articles published by EU Startups, Cowork7/24, and Big Seven Travel talked about the best co-working spaces in Tallinn, Estonia or Europe. The majority of the providers considered the “best” were already listed in the databases mentioned above. The additional providers examined such as Telliskivi Cultural Center, Technopolis Ülemiste, and others, operate in one location only.
Lastly, we examined some of the largest co-working companies in the world or Europe that were not listed in the databases and articles mentioned above. We have assumed that global players similar to or larger than Regus may also operate in Estonia. However, we have discovered that companies such as WeWork, Spaces, Servcorp, Impact Hub, and Mindspace do not operate any locations in Estonia. UMA Workspace operates one location in Estonia, but other Europe-based co-working space providers such as Talent Garden and Silver Square do not operate any location in the country.
We have determined that despite the “vibrant startup scene” in Estonia, especially in Tallinn, the country has a relatively small co-working market primarily due to the size its land area and population. Estonia has a land area of around 42,000 square kilometers and a population of around 1.2 million only. A recent research conducted on co-working spaces in Europe has revealed that there are no co-working hotspots in Estonia.
Part
03
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Part
03

Registering a New Company: Estonia

New business registration and opening an Estonian business bank account is easier for private limited corporations with some connection to Estonia; it is also easier for members who are Estonian citizens, e-Resident holders, digital nomads, and freelancers.

Overview and challenges in starting a new business in Estonia

  • It takes about five days, at the most, to completely set up a business in Estonia. Registration is fast since it takes less than one day to check the company name, submit a registration application online, and deposit the initial capital. It takes three days to register for VAT at the Estonian National Tax Board and another day to register employees with the Employment Register.
  • Estonia holds the Guinness World Record for “fastest time to register a new legal entity” through its e-Estonia’s Digital Society.
  • Estonia's ease of business resulted in being one of the countries in Europe with the most startups launched per capita.
  • The World Bank Group's study shows that Estonia scored 95.25 in starting a business and ranks 16 among OECD high-income countries and scored 80.5 in ease of doing business.
  • Though doing business and starting a business is easy, additional local sales tax is costlier for firms. Additionally, the Estonian government made construction permits complex by increasing time for obtaining design criteria from municipalities.
  • A private limited corporation, or osaühing (OÜ), is ideal for small- and medium-sized businesses. They are also the most common type of business in Estonia and incorporating takes less than an hour and costs a total of $230 (€208). The initial capital needed is $2,773 (€2,500).
  • Companies can only be registered if all founders and board members are Estonian or have a Latvian or Belgian ID card, Estonian or Lithuanian mobile ID, or Estonian e-Residency digital ID card.
  • Thus, it is vital for non-Estonian residents to apply for e-Residency as it will only take 48 hours on average if all members are e-Residents. Members who are not e-Residents will need to wait 3-4 weeks.

Setting up a business banking account

  • Companies who are planning to register in Estonia are classified into two groups: Companies that have "connection to Estonia" and companies run by a single shareholder with easily traceable income. When companies meet the requirements and criteria of these two groups identified, then it is most likely that they will be able to open an Estonian business bank account.
  • Companies that have "connection to Estonia" means having Estonian employees, having a relationship with Estonian retailers and suppliers, or companies that are really serving the Estonian market. The second group mainly consists of digital nomads such as freelancers, consultants, solopreneurs and other digital entrepreneurs.
  • It is much easier for an Estonian bank application to be approved if one is classified within the two groups mentioned above (compared to large companies, probably in manufacturing or wholesaling, owned by non-residents including e-Residents). The main reason is that large companies will less likely benefit from e-Residency so it would not be clear to the bank why they desire an Estonian bank account.
  • On the other hand, small companies and especially digital nomads with traceable income, are relatively simple for Estonian banks to monitor for risks especially when they are visible online.
  • Opening an Estonian bank account can entail quite a large amount of time and money as Estonian banks still prefer to verify their clients in person thus a visit to Estonia is required.
  • Recent changes to Estonia's commercial code headed by Riigikogu, the country's parliament, benefits private limited companies especially those owned by non-Estonians as the new commercial code removed the requirement that limited companies should use an Estonian bank account when registering share capital. From January 2019, companies can use a credit or payment institution in the European Economic Area (EEA) which include all EU countries plus Iceland, Liechtenstein, and Norway.
Part
04
of twelve
Part
04

FinTech Climate: Estonia

Estonia has a very friendly climate for FinTech businesses. With the introduction of several government programs aimed at promoting FinTech start-up growth, the country has earned a position as one of the leading FinTech hubs in the world. On its official foreign investment page, the Estonian government describes the country as "a global centre of excellence for FinTech."

FRIENDLINESS TO FINTECH COMPANIES OR STARTUPS

  • Estonia is a strong start-up hub, particularly in the FinTech business sphere. The government has introduced friendly regulations that promote innovations and create "great conditions for digital commerce."
  • This country is "doing its best" to nourish its "growing FinTech wave". The Baltic state is achieving this through its implementation of cutting-edge legislation and "offering a strong helping hand to start-ups".
  • The efficient and healthy conditions that promote FinTech start-up growth in Estonia are largely due to regulations and initiatives that the government has been working on over the years.
  • Notable innovations introduced by the Estonian government include e-services, e-Banking, e-Taxing, and many other digitally managed services.
  • A major contributor to the surge in start-ups within this country is its e-residency program which allows company owners to register their businesses in Estonia from any part of the world. These businesses can also run remotely.

LEADERSHIP POSITION IN THE FINTECH INDUSTRY

  • The Estonian government describes the country as "a global centre of excellence for FinTech." Fintechnews describes Estonia as a country that is "poised to become a leading FinTech hub."
  • Estonia is an entirely cashless country with "over 99% of financial transactions occurring digitally." Blockchain and Electronic ID are widely used FinTech technologies in the country.
  • In Europe, the country "has one of the highest rates of start-ups per capita". Startup Genome reveals that 29% of all jobs created by start-ups in the country are within its FinTech industry.
  • TransferWise is one of the most widespread FinTech unicorns to have emerged from this Baltic country. In 2017, this international money transfer company raised $280 million in investment.
  • CNBC reveals that 99% of Estonia's "public services are available online". Also, the country has stronger broadband than several countries in the developed world. This Baltic state is considered as one of the most advanced digital societies in the world.
  • Currently, Estonia houses "408 FinTech startups". Notable startups operating in the country include Funderbeam, Fortumo, Veriff, and Bondora.
  • As of 2017, Estonia's e-Residency program had attracted over "24,000 global entrepreneurs". Other government programs that have stimulated its strong FinTech position include Startup Estonia and Enterprise Estonia.
Part
05
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Part
05

FinTech Companies: Estonia

After exhausting several sources, including Tracxn, Crunchbase, and others, we were only able to gather three Fintech companies based in Estonia that receives A, B, C or D funding in 2018 or 2019. A deep dive of each is provided below.

FUNDERBEAM

  • Funderbeam is a Fintech company based in Tallinn, Estonia.
  • The company provides research tools and funding to several private companies' with a vision to build something similar to the stock exchange for startups based on blockchain technology.
  • Funderbeam received series A funding worth $4.5 million on July 12, 2019.
  • The company's website can be reached here.

VERIFF

  • Veriff is a Fintech company based in Tallinn, Estonia.
  • Veriff provides online identity verification solutions to financial institutions which can be then used for fraud prevention and onboarding clients. Additionally, the company uses video verification to verify and capture documents across different registers.
  • The company received series A funding worth $7.7 million on July 19, 2018.
  • The company's website can be reached here.

XOLO


RESEARCH STRATEGY

We commenced our research by first looking for pre-compiled lists of Fintech companies in Estonia that have received funding recently. Despite searching through several sources that targeted Fintech companies in Estonia, including Tracxn and Voog, we were unable to determine any such lists. However, through this search, we were able to gather a list from Tracxn detailing 408 Fintech companies based in Estonia along with a report on 69 Fintech companies provided by Voog. We then extensively reviewed each Fintech company provided by Tracxn and Voog to see if they have received any funding in 2019 or 2018. Unfortunately, we could only gather three Fintech companies through this research as the majority of the companies either didn't receive any funding or received funding in different categories like Seed.

We then attempted to look for emerging startups in Estonia. We were hoping to review each emerging startup to, later on, sort out those startups that are based on the Fintech genre and have received any of the series A, B, C or D funding in 2018 or 2019. We searched through several research databases including Research Gate, Deloitte, and others. Unfortunately, most of the databases either didn't focus on emerging startups at all or provided information regarding driving factors for the emerging startups in Estonia or similar which were not pertinent to the client's request.

As none of the above strategies yielded any useful result, we began looking for articles on the Fintech industry in Estonia. We were hoping to gather any relevant list of successful Fintech startups that have raised a significant amount since their inception. We searched through news journals, magazine articles, as well as private companies' databases including Forbes and Investopedia. Unfortunately, none of the sources yielded any positive results.

As a last resort, we extensively combed through company and business databases like Crunchbase, Angel List, DB Hoover, ZoomInfo, Craft, among others. Using the advanced search options on the databases, we searched for Fintech companies in Estonia, filtering the results to only include companies that have received funding in 2018 or 2019. We also used the databases to locate the funding rounds, the Fintech companies have received but for some companies, it was indicated that they have received funding within the period but the amount wasn't disclosed. The majority of the companies found in the databases were the same as encountered earlier. Hence, none of the searches yielded any further results.

Of Note: In case the Tracxn source could not be accessed through the source linked, it can be accessed through the URL https://tracxn.com/explore/FinTech-Startups-in-Estonia/ for the information regarding Funderbeam and Veriff. Additionally, we have also provided the screenshot of the same in this google document.
Part
06
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Part
06

Digital Services Trends: Estonia

Even though we were not able to find 5-7 trends in terms of digital services being offered to businesses in Estonia, we could identify at least some trends in digital services being offered in the financial services sector to businesses in Estonia.

MODERN E-SOLUTIONS

  • Estonia has been using modern e-solutions to make setting up and running in Estonia quick and easy.
  • Some solutions include electronic tax claims, digital signatures, e-Business Register or the availability of public records online.
  • 98% of companies in Estonia are established online.
  • 99% of banking transactions are made online.
  • 98% of tax declarations are filed online.
  • The most important fintech companies in Estonia are Bondora, Fortumo, Transfer Wise, Pocopay, Admiral Markets, Arvato Bertlesmann, Friendly Finance, LHV Bank, Big Data Scoring, and Investly among others.
  • Estonia was known for being home to the fintech unicorn Transferwise who is currently valued at US$ 1.6 billion.
  • Startups in Estonia raised a record of nearly EUR 328 million in investments in 2018, a considerable increase compared to the previous year at EUR 272 million.
  • Among the categories that are trends in Estonia there are electronic banking, electronic payments and e-tax filing.

BECOMING A CASHLESS SOCIETY

  • Estonia has become a cashless society with over 99% of financial transactions occurring digitally.
  • Digital solutions such as electronic ID and Blockchain are widely used in FinTech applications.
  • Estonia is a front runner in applying modern IT solutions having a wide range of state e-services, e-banking, nation-wide ID-card and a digital signature legally equal to handwritten signature.
  • Currently just over 50,000 people have signed up to the e-residency programme and if trends continue it could bring an estimated €31 million in net income and €194 million in net indirect socioeconomic benefits by 2021.
  • Some 50,000-plus people hold the digital identity card but there is no public data on how many also bank in Estonia.

ESTONIA'S E-RESIDENCY PROGRAM

  • In 2017, Estonia launched its e-Residency program in partnership with Finnish financial technology company Holvi that enables borderless digital banking.
  • The program enables anyone to apply to become an e-resident of the Republic of Estonia, after which they can register a global EU company that can be managed online from anywhere in the world.
  • According to the Estonia E-residency site, more than 4200 businesses have been registered in over 130 countries.

YOUR RESEARCH TEAM APPLIED THE FOLLOWING STRATEGY

We started the research by looking for any industry reports and market studies on the digital services being offered in the financial services sector to businesses in Estonia. However, no such specific report could be found published by leading market research firms including but not limited to Deloitte, KPMG, MarketsandMarkets, Transparency Market Research and Global Market Insights, among others. Most of the reports found only provided information on doing business in general in Estonia such as PwC and none of the reports provided any specific trend in digital services being offered in the financial services sector to businesses in Estonia.
Then, we started to search through government websites to identify any trends in digital services being offered in the financial services sector to businesses in Estonia. The idea here was to find any initiatives taken by the Estonian government which has become a trend in digital services being offered in the financial services sector to businesses in Estonia. We came across some government sources such as E-estonia and Invest in Estonia that provided some information on trends in digital services being offered in the financial services sector to businesses in Estonia.
As a last resort, we started to search for any information through media publications and new articles that would provide any information on any trends in digital services being offered in the financial services sector to businesses in Estonia. We found numerous articles published by Tracxn, Tech Bullion, FintechTech News, and Your Company in Estonia that provided information on various Fintech startups in Estonia.
Part
07
of twelve
Part
07

Google Pay Statistics: Estonia

After thorough research, we were not able to determine the statistics of how widely Google Pay is used in Estonia. However, we were able to determine that the digital commerce is the largest market segment of online transactions in Estonia and in 2019 it has a transaction valued of US$737 million.

USEFUL FINDINGS

  • As of September 2018, Google Pay had become so popular recording more than 100 million downloads globally.
  • Google Pay provides customers with a faster and more convenient way to pay on websites, via apps, in online shops, or in physical stores, thus making business easier.
  • The market's largest segment in Estonia is digital commerce, it has a total transaction value of US$737 million in 2019.
  • In 2017, sales of goods by post and online in Estonia amounted to EUR 239.4 million.
  • Over 200,000 payments are made through internet banks in Estonia.
  • In 2019, the total transaction value in the digital payments segment in Estonia amounts to US$802 million with the total transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 11.0% to hit US$1,218 million by 2023.

Research Strategy:


We began by going through global publications that provide analytical data for various countries of the world in a bid to find the statistics showing how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia. Globally, We came across a report by Mobindustry but the report only provided data on the number of downloads of Google Pay app without giving details on how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia. Another report by Wirecard only stated that Google Pay provides customers with a faster, more convenient way to pay on websites, via apps, in online shops, or in physical stores, thus making business easier. We could not find data on how Google Pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia.
Next we sort to research for any regional and local publications and we came across a report by Eesteepank that detailed that over 200,000 payments are made through internet banks in Estonia. However, we could not find data on how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia. Another report by Nordea Trade detailed that Estonia has a high internet penetration rate, which is 91.4% (out of a population of 1.3 million), with a smartphone penetration rate which is estimated to be slightly above 50%. Unfortunately, we could not find data on how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia.

We decided to check for any statistical data and we were able to establish that the total transaction value in the digital payments segment in Estonia amounted to US$802 million in 2019, and that the total transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 11.0% to hit US$1,218 million by 2023. Unfortunately, the data did not provide specifics of how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia.
We also made use of analytical databases and apps from Similar Web to drag data across the internet on Malta on the subject under investigation for analysis but this strategy failed to provide any relevant results specific to Estonia. We could not find data for Estonia to know how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, Number of merchants accepting Google Pay in Estonia
Triangulation was not possible because we were not able to locate any data point that could be used for computational purposes. Hence, we were not able to provide any relevant details specific to how Google pay is used in Estonia, Number of Google pay users in this country, Number of Google pay payments by value (EUR) in this country, and the Number of merchants accepting Google Pay in Estonia.
Part
08
of twelve
Part
08

Apple Pay Statistics: Estonia

An exhaustive search in the public domain shows that information on "how widely is Apple Pay used in Estonia" is non-existent and media coverage on the specified topic is scarce. The most relevant media mention is: Estonian online banks like Revolut, Monese, and N26 are offering Apple Pay transactions. Below are the helpful findings and a detailed methodology on the topic.


USEFUL FINDINGS

  • Estonian online banks like Revolut, Monese, and N26 are offering Apple Pay transactions.
  • Apple Pay payment service is growing faster compared to any other payment service and will soon replace cash, credit and debit cards.
  • Though Apple Pay is not that convenient than swiping a card, it is more secure compared to the card-based transaction, for example, when an Apple Pay user's iPhone gets lost/stolen, he/she can secure his/her account by just deactivating his/her digital account number via the bank.
  • Using Apple Pay, one can shop in stores and online by using his/her N26 MasterCard to purchase items.
  • Currently, in Estonia, 90% of businesses have equipped their premises with contactless card payment terminals. It is projected by 2020 all sales point will be using this kind of payment.
  • In some regions, you will only need to enter your PIN, sign receipts or use another method of payment if your transaction exceeds a certain amount when using Apple Pay.
  • Worldwide, 16% of iPhone devices are using Apple Pay, but this percentage is expected to grow more in 3 to 5 years. Also, it is projected that by 2020 half of mobile wallet users will have Apple Pay.
  • In 2018, the worldwide year-end user base of Apple was 383 million users, an increase from 127 million users in the previous year.


RESEARCH STRATEGY

We began our search by going through global organizations that provide analytical data for various countries of the world in a bid to find the statistics showing how Apple Pay is used in Estonia, the number of apple pay users in this country, number of apple pay payments by value (EUR), and the number of merchants accepting Apple Pay in Estonia. We came across mac rumors report, but the report only has the percentage of devices using Apple Pay worldwide and it does not provide details on how Apple Pay is used in Estonia.

Next, we searched for information on Estonian online banks such as Monese, Revolut, and N26 that supports Apple Pay in Estonia, but this data could not provide any relevant information on answering the research criteria. Further, we expanded our search to statistical databases such as Statista. On this site, we could find that, in 2018, the global year-end user base of Apple was 383 million users, up from 127 million users in the previous year, but we could not find any specific data relating to Apple Pay usage in Estonia. Additionally, we used analytical apps from similar webs to help us find how online apps are being used in Estonia, unfortunately, we could not find any useful data pertaining to the Apple Pay use in Estonia using this strategy.
Finally, we tried to look for any useful information that could help us conduct a triangulation and answer the research criteria. However, we could not find any figure or data that is relevant in providing information on how Apple Pay is used in Estonia, the number of Apple Pay users, number of Apple Pay payments by value (EUR), and the number of merchants accepting Apple Pay in Estonia.

NOTE: From the above strategies, we have concluded that there is no information in the public domain to answer the research criteria. This could be because this research has not been conducted yet in this country, Estonia and if it has, the information/results have not been shared with the public yet.

Part
09
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Part
09

Digital Banking: Estonia

Estonia is a cashless country that has about 99% of all its financial transaction being conducted online. With e-resident in place, individuals can start a business with great ease. They can open business banking accounts and apply for credit cards within a day.

OVERVIEW OF DIGITAL BANKING IN ESTONIA

  • Estonia has a highly advanced internet banking system, with approximately 99% of all banking transactions being conducted online. There has been a steady growth in the number of consumers using online banking from 2005 to 2018. According to the Estonian Banking Association, customers operate 1.25 active internet account per inhabitant.
  • The top online payment methods in the country are through credit cards, pay-by-links, and PayPal. Digital payments comprise the largest segment of the fintech market in Estonia with total transactions amounting to about $802 million. Besides, more than 200,000 payments are conducted via online banks.
  • Pocopay app is one of the most innovative e-Banking solution in Estonia. It provides convenient banking opportunities by allowing consumers to use their mobile phones to open and us a bank account. Customers can also use their QR codes or email addresses to request for money and also use MasterCard contactless debit card to make payments.
  • SEB bank also has its e-banking app, which can be found on Google Play and is available for both business and private customers. Swed bank's mobile banking app on the hand can be downloaded on either Google Play or Apple Store.
  • Apart from traditional banks like SEB Bank, Swed Bank, and LHV Pank, other players in the digital banking sector in Estonia include Holvi, Paysera, Boku, Instarem, Revolt, and Transferwise.

ACCESS TO DIGITAL BANKING in ESTONIA

  • Being a cashless country and based on changes in regulation that were effected in 2017, with an e-residency or e-ID, it is now possible to open a bank account online.
  • Consumers are using more tablets and smartphones internet banking thus making digital banking the fastest growing service channels. According to Statistics Estonia, three-quarters of household in Estonia have mobile internet connection. About 73% of internet users use their mobile phones while on the move, and 32% use portable computers. Out of these internet users, 90% of individuals aged 16 to 74 years have been using internet banking services.

EFFORTS BY THE ESTONIAN GOVERNMENT TO PROMOTE DIGITAL BANKING IN BUSINESS.

  • The government of Estonia has been applying several e-services, including e-banking, to ensure that businesses in the country operate with more transparency and ease. With the e-residency program in place, foreign investors can use the internet to open a bank account without having to visit a brick and mortar bank physically. Also, e-residents can make banking transactions wherever they are in the world.
  • The country has over 20,000 from foreign nations that have successfully applied for e-residency and are currently managing over 3,000 businesses.
  • The government of Estonia has partnered with Holvi, a fintech company to provide borderless banking in its e-Residency business program. The program allows e-Residents to open a business account anywhere in the world and be able to get a MasterCard at a determined monthly fee of €35.

DIGITAL BANKING EFFORTS BY TOP BANKS IN FINLAND

  • Swed bank has invested 3 million euros in providing personalized digital banking solutions in all its markets. The services will be provided through its partnership with Meniga, a digital solution provider based in the United Kingdom.
  • According to Iļja Nogičevs, the digital development manager for SEB bank, the bank has implemented several digital solutions in its banking system. The bank has introduced Smart-ID system, a platform for new businesses to apply for a loan in the internet banking section.
  • On September 2018, LHV Pank introduced e-identification in its efforts to promote internet banking, thus making it easy for their customers to make banking transactions remotely.
Part
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Part
10

Digital Banking By Industry: Estonia

Even though we were not able to find 3-5 industries in Estonia that have most embraced digital business banking services, we were able to provide the biggest industries that have growth in Estonia such as the energy sector, the industry sector, and the services sector.

HELPFUL FINGINDS

  • Biggest digital banking service providers in Estonia are as follows: Holvi, Transferwise, Revolut and LeoPay.
  • The biggest industries in the country of Estonia are the energy sector (oil industry, forestry, biomass production), the industry sector (production of chemical products, textile, machinery) and the services sector (transportation, banking, telecommunications).
  • During 2018, construction was the industry that has seen the biggest growth in Estonia.
  • Agriculture, forestry and fishing have contributed to the GDP the most, while the mining industry negatively impacted country's economic growth.

YOUR RESEARCH TEAM APPLIED THE FOLLOWING STRATEGY

We start the research by looking to various relevant local and international business publications, industry news publications such as e-estonia.com, toostusuudised.ee and university research sites such as taltech.ee. What we hoped to find in these types of sources were reports, academic articles and insights regarding industries using digital banking means in the country. No studies, reports or articles focused on or provided relevant insights regarding data requested was found. Instead, we found available information focused on the percentages of companies that are considered as large business.

Next, we have attempted to identify the biggest industries in the country and looked into industry trend reports specific to Estonia to find insights into demand for digital banking services in order to manually determine which see the largest. This strategy has failed because search determined none of the industry reports focused on or mentioned any insights regarding any of the industry demands for digital banking services, rather focusing on historical development and general digitalization of the processes involved in the industries.

Hence, we have decided to identify banks that operate in the digital banking sector and look through their business reports in order to see which industries use their digital banking services the most. To identify the financial service providers, we have used this list. We have searched each of the banks business reports, annual reports and financial statements, looking for insights regarding lines of business their clients come from. This strategy has failed because, in the business reports, we were unable to locate any relevant statements specific to Estonia and search determined none of the bank institutions published the desired information.
Part
11
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Part
11

Challenger Digital Banks: Estonia

The top challenger digital banks that offer banking services to businesses in Estonia include Holvi, Revolut, and Monese.

Challenger Digital Banks that Offer Banking Services to Businesses in Estonia:

#1. Name: Holvi

#2. Monese

#3. Revolut


Research Strategy:

We commenced the research to determine the top challenger digital banks that offer banking services to businesses in Estonia by directly searching for any industry reports and market studies on the Estonia challenger banks for businesses market. The idea here was to find any report specific to Estonia since such reports usually provide the names of leading players in the industry. However, no such specific report could be found published by leading market research firms including but not limited to Deloitte, KPMG, MarketsandMarkets, Transparency Market Research, and Global Market Insights, among others. Most of the reports found using this strategy were either on the overall European market published by CBInsights; and global market published by KPMG and Market Study Report, LLC. None of the reports provided any specific challenger banks from Estonia.
Next, we searched for pre-compiled lists of all the challenger banks in Estonia. The idea here was to conduct an exhaustive search through such companies that offer services to businesses and find their market penetration data to rank them as the top in Estonia. We came across numerous lists published by Eesti Pangaliit, Corporate Finance Institute, and The Banks.eu that only provided information on top banks in Estonia. However, all the lists only mentioned traditional banks and none of the lists provided any names of challenger banks in Estonia. We also searched for the leading challenger banks in Europe. The idea here was to find any names of challenger banks based in Estonia. We came across numerous lists published by LearnBonds, VentureRadar, and Mobile Only Banks. However, none of the lists provided any names of companies headquartered in Estonia.
Next, we searched through various media articles and press releases to find any information related to challenger banks for businesses in Estonia. We came across an article published by Fintech Futures that mentioned that Holvi, a digital bank based in Finland, operates in Estonia. Further, we started to search for information on Holvi’s competitors published by leading databases that provide the profiles of companies such as Bloomberg, Hoovers, Crunchbase, CB Insights, and Manta, among others. However, most of the profiles found such as Crunchbase and ZoomInfo only provided names of Holvi’s European competitors and none of the companies were based in Estonia.
As a last resort, we searched through all the European companies to find any company that has established operations in Estonia as well. After an exhaustive search through all the companies found earlier, we were able to find only two additional companies namely Monese and Revolut that provided services to business and are operational in Estonia. However, due to the unavailability of any existing market study and the companies being relatively new in Estonia, no information could be found on the companies’ market penetration in Estonia.
Part
12
of twelve
Part
12

English Usage: Estonia

Estonia was rated seventh in the 5th edition of EF English Proficiency Index and 37% of Estonians actively speak English. Around 22.67% speak English as a foreign language, while it is a mother tongue for only 0.73% of people in Estonia. It is a very popular foreign language for Estonian students and a majority of business people speak and understand English. Employees in the Estonian IT industry normally use it, but in other sectors such as the hospitality industry, people don't have such a good command of the language.

ENGLISH PROFICIENCY LEVEL IN ESTONIA

ENGLISH AS A MOTHER TONGUE OR SECOND LANGUAGE

USE OF ENGLISH IN BUSINESS, ADVERTISING AND MEDIA

Sources
Sources

From Part 02
From Part 03
Quotes
  • "Again, this can be done entirely online! Simply visit e-Estonia’s Digital Society and follow the steps mentioned. (Today’s Trivia: Estonia holds the Guinness World Record for “fastest time to register a new legal entity”:"
  • "The most common business form for a company in Estonia is an OÜ. (OÜ stands for “osaühing”. We assume you knew this means ‘private limited company’, right?) Incorporating an osaühing takes less than half an hour, and costs a total of 208 EUR (if you do it all by yourself). An OÜ company can be entirely owned and operated by one single person. And in the end you do want to have full control over your own business, don’t you"
Quotes
  • "In contrast to what happens with other businesses, Estonian limited corporations don’t have any type of problem opening company bank accounts. You can open accounts practically anywhere in Europe; what’s more, you can also do so on a global scale if your investments demand it."
  • "One of the more interesting opportunities is to open a SwedBank account. This bank is the most open when it comes to non-residents who don’t have clients in Estonia, and is willing to open business accounts for practically anyone, including internet entrepreneurs and freelancers. SEB and Norvik Banka are among the other banks that have more requirements concerning sales volume and initial deposit. Of course, it will never be as difficult to open a bank account in Estonia as it is in Hong Kong."
Quotes
  • "It’s a simple fact – where business is easy, business will grow. No wonder Estonia is one of countries with most startups launched per capita than anywhere else in Europe"
  • "Modern e-solutions make setting up and running a business in Estonia quick and easy. Estonian solutions like digital signatures, electronic tax claims, e-Business Register or the availability of public records online have pared bureaucracy down to a bare minimum and facilitated an environment where business is easy. Industry 4.0. is another step on the road to the digital revolution."
Quotes
  • "Some e-residents who are also residents of the EU/EEA have successfully opened a business bank account in their own country for their Estonian company. Recent changes to Estonia’s Commercial Code that allows share capital to be paid from any business banking account in the EU/EEA may encourage residents of the EU/EEA to consider this option."
  • "The first is a company that has a “connection to Estonia”. This should be clearly explained in your company plans for the future or demonstrated based on your existing activity. It could include employees in Estonia, as well as relationships with partners and suppliers, as well as actually serving the Estonian market."
  • "The second is a company run by a single shareholder with easily trackable income. This covers many freelancers, consultants, solopreneurs and other digital entrepreneurs around the world who fit under a broad group of people sometimes called ‘digital nomads’ as it is relatively simple for banks to monitor risks associated with these companies — especially when they are so visible online — as well as understand why they have chosen an Estonian bank account in order to benefit from Estonia’s location-independent business environment."
  • "If you are connected to a country on the FATF list of high risk and other monitored jurisdictions, you will most likely have difficulty accessing any kind of business banking service even with a company registered in Estonia."
Quotes
  • "Any Estonian limited company can manage its business activities using a business banking account at a credit or payment institution in the European Economic Area. This also includes the payment of your share capital contribution."
  • "If you do not have a business banking account at a credit or payment institution in the European Economic Area, you will need an EU IBAN account. As an e-resident, you have three options: 1. Apply for a business bank account at an Estonian bank 2. Apply for a business payments account through a fintech company 3. Apply for a business bank account at a foreign bank"
Quotes
  • "That’s all! If all the members are e-Residents, the company registration will take around 48 hours average! If some of the company members are not e-Residents yet, they need to apply at the official e-Residency website. Once their applications are approved, they will need to wait until all of them have their ID card in their hands. It usually takes 3-4 weeks, so be patient!"
Quotes
  • "However, non-residents (which includes e-residents) have the most difficulty obtaining an Estonian bank account for a combination of reasons. For a start, Estonian banks still choose to verify their clients in person so a visit to Estonia is required, which can mean quite a large investment of time and money depending on where they are in the world."
  • "Estonia’s Parliament, Riigikogu, today passed an amendment to the country’s Commercial Code to remove the requirement that limited companies must use an Estonian bank account when registering share capital. From January 2019, they can instead use a ‘credit or payment institution in the European Economic Area’ for this."
  • "Estonian banks are less likely to open business accounts for non-residents of Estonia (including e-residents) if their companies are large, involved in manufacturing or wholesaling, acting as an intermediary to sell the services of others, only doing business in their home country or outside of the EU — in addition to not being visible online or not being able to explain clear business goals."
  • "One reason for this is simple: These types of companies are less likely to benefit from e-Residency so it would not be clear to the bank why they desire an Estonian bank account."
From Part 06
Quotes
  • "Modern e-solutions make setting up and running a business in Estonia quick and easy. Estonian solutions like digital signatures, electronic tax claims, e-Business Register or the availability of public records online have pared bureaucracy down to a bare minimum and facilitated an environment where business is easy. Industry 4.0. is another step on the road to the digital revolution."
  • "It’s a simple fact – where business is easy, business will grow. No wonder Estonia is one of countries with most startups launched per capita than anywhere else in Europe."
  • "98% of companies established online"
  • "99% of banking transactions online"
  • "98% of tax declarations filed online"
Quotes
  • "Estonia is a cashless society with over 99% of financial transactions occurring digitally. Electronic ID and Blockchain are widely used in FinTech applications. "
  • "80+ FinTechs ranging from innovative startups such as TransferWise to Blockchain leader Guardtime make Estonia a global centre of excellence for FinTech."
Quotes
  • "Estonia's e-Residency program on Thursday afternoon announced a milestone partnership with Finnish financial technology company Holvi that will launch borderless digital banking for its borderless digital nation."
  • "The e-Residency program, the first of its kind in the world, enables anyone to apply to become an e-resident of the Republic of Estonia, after which they can register a global EU company that can be managed online from anywhere in the world. "
  • "The newly-announced partnership with Holvi now also eliminates the need for Estonian e-residents to travel to Estonia in order to access business banking, according to an Enterprise Estonia press release."
Quotes
  • "Estonia’s push to become a digital society has left it vulnerable to dirty money and sanction breaches, the country’s top banking regulator has warned"
  • "The Baltic state took center stage in one of the largest-ever money laundering scandals last year - the Estonian branch of Danske Bank helped funnel money from Russia and other ex-Soviet states, a report by the Danish lender showed."
  • "Some 50,000-plus people hold the digital identity card but there is no public data on how many also bank in Estonia."
From Part 09
From Part 11
Quotes
  • "This means e-residents don’t have to travel to Estonia in order to access business banking. An EU company with a fully digital EU IBAN business account can be established anywhere with an internet connection."
  • "In addition, it has teamed with Finnish fintech firm Holvi (which was acquired by BBVA last year) – who will offer their services to “location-independent entrepreneurs"
Quotes
  • "Founded in 2011 and based in Helsinki, Finland, Holvi is the world’s premier digital banking service for freelancers and entrepreneurs. "
  • "Combining powerful money management tools with an easy-to-use business current account, Holvi offers an innovative banking experience that actually helps you run your business."
Quotes
  • "Open your digital business current account 100% online – from anywhere in the world."
  • "Having established and registered your company in Estonia."
  • "With e-Residency you can apply to join a new digital nation, powered by the Republic of Estonia, and register an EU company that can be managed anywhere online with an internet connection."
  • "With Holvi as your business current account, you don’t need to travel to Estonia in order to access business banking anymore."
Quotes
  • "A mobile current account for your UK registered business. Fast to open, free contactless card, and supported in 12 languages."
  • "For a monthly fee of £9.95 you’ll enjoy the features of a UK business account and a Plus personal account combined within the Monese app. Separate your business and personal spend with free dedicated debit cards and manage both seamlessly from one place."
  • "Business and personal accounts both come with unlimited transactions, fast bank transfers and Direct Debits. Also included are an optional Euro personal account and (coming soon) Euro Business account."
  • "The Monese business account comes with an exclusively designed contactless debit Mastercard supported in-app with real-time smart transactions."
Quotes
  • "Monese, the Estonian challenger bank, is adding 90,000 customers per month"
Quotes
  • "The London-based Monese, with an office also in Tallinn, offers a mobile-only current account and targets customers with a low credit score and expats who have moved to a new country."
  • "The company was founded in the UK by the Estonian entrepreneur, Norris Koppel, in 2013 and currently employs 140 people."
Quotes
  • "A global business current account for easy international payments, with prepaid business cards and an Open API."
  • "Transfer money to any other Revolut account (business or personal) instantly and for free. Save on transfer fees when you make payments to businesses around the world."
  • "Easily issue and track employee expenses on your dashboard when you issue cards to your team."
  • "Our Open API allows you to seamlessly integrate your Revolut business account into your workflow. Use it to automate cross-border business payments, send payouts to clients or employees and monitor transactions according to your business’ needs."
  • "Revolut Ltd is a company registered in England and Wales (No. 08804411)."