Voice of the Industry

Fintech startups and ecosystem trends in Romania

Friday 30 July 2021 08:27 CET | Editor: Alin Popa | Voice of the industry

Executive Director at ROTSA (Romanian Tech Startups Association), Cristiana Bogățeanu depicts how does the fintech landscape look like in Romania
At the beginning of the summer we sat with Maria Staszkiewicz, President at European Digital Finance Association, to learn more about the European fintech scene and ways that fintechs could support post COVID-19 economic recovery. Today we continue our Fintech Series – ‘From helping European local communities to building supper apps’- and delve into trends and challenges of the Romanian fintech landscape.
  • The pandemic has accelerated the growth of Romania's fintech sector. This was possible due to displacement prohibition and the growth of online commerce;

  • Fintech companies and banks have reported a 70% increase in the use of digital, mobile, and cloud platforms;

  • The pandemic led to a 20% reduction in remittances. Platforms and applications that offer money transfer services have benefited during this period. The main advantage was the lower costs.

  • The fintech sector is a mass contributor to Romania's GDP;

  • The development gap between the urban and rural areas is a problem for the sector's growth;

  • Some traditional banks are investing in fintech startups and knowledge sharing via hackathons and acceleration programs;

  • Romanian Tech Startups Association recently launched a Map of Romanian technology startups. The map is available here;

  • According to the study on COVID19 impact on tech startups, fintech startups are the largest employers among Romanian startups (35.2%). And have recorded second-place earnings – 31,8%.

  • In the past years, Romania's fintech sector has experienced important developments. And is pushing the needle forward towards creating a cashless society. The pandemic forced the sector to adapt to restrictions imposed by authorities. And take advantage of the huge growth of online commerce.

According to the findings of ROTSA's study, ‘The Impact of COVID-19 on Romanian Tech Startups’, fintech startups are the largest employers in Romania  (35.2%). And have recorded the second-place earnings – 31,8%.

A few extra factors helped the growth of the sector. Global smartphone penetration creates a huge opportunity for mobile financial services. Now there are 6.055 billion smartphones worldwide, out of 7.8 billion people. 

Romanian banks and startups took advantage of this opportunity and transformed the smartphone into a POS. Payments can now be made from a smartphone or smartwatch. 

This, coupled with the rise of 5G (Bucharest fully covered), and Romania's top internet speed, has led the fintech industry to become the fastest growing sector in Romania.

Plus, Romania enjoys high-tech knowledge among its population. More than 5000 people graduate from a technical university every year.  Especially teenagers have great tech skills. Romania won 1st place at the International Robotic Championship. The team was the first non-American team to win the competition. This makes the national tech industry to be among the first choice of investors and entrepreneurs.

They can access highly skilled people, at a lower cost than in western markets. The result is cost-effective, high-quality services and products.

After years of outsourcing software development and R&D, Romania is now transforming its communist legacy of excellence in science, mathematics, and technical education, into a tech hub of its own.

Here are some of the fintech startups to watch out for in 2021:

  • Elrond – a highly scalable, fast, and secure blockchain platform for distributed apps, enterprise use cases, and the new internet economy. The market capitalisation of the Elrond cryptocurrency (EGLD) developed by the Romanian startup exceeded USD 1 billion. The founders say that would make Elrond ‘the second Romanian Unicorn, after UiPath’.

  • Pago – the first mobile app in Romania for managing and paying all utility bills in one place. The app launched in September 2017. It now encompasses over 290 service providers, 2 million paid invoices, and over 135,000 users in Romania.

  • FintechOS – is driving a paradigm shift in the way financial products and services are created, by making banks and insurers truly customer-centric. In 2021 the startup was the winner of 2021 Microsoft Romania Partner of the Year. The team aims to reach markets in Europe, America, and Asia after a 2020 funding round of 13 million euros.

  • Beez – is offering shoppers an alternative ‘buy now, pay later’ model, with no interest, no late fees, and no commission. The startup has over 160,000 users and more than EUR 2.5 million in transactions to date. Beez closed a venture capital financing round totalling EUR1.2 million in March 2020.

  • Symphopay – is a solution designed for retailers who want to integrate all partner banks into one single payment terminal. Founded in 2015 in Bucharest, the startup has so far received funding of EUR 1.4 million. Currently, they are expanding to Greece, Bulgaria, and Poland.

  • ThinkOut – is a dedicated cash flow analysis solution for small and medium-sized companies. The platform provides a real-time overview of current performance and a better understanding of future expenses based on users' transaction history. In the past three years, the startup took part in acceleration programs in the CEE region (MKB Fintechlab in Budapest and Huge Thing in Poland). ThinkOut has subsidiaries in Romania, Hungary, and Poland. And has ongoing partnerships with major financial institutions.

  • SelfPay – offers self-service payment kiosks. Founded in 2009, the startup is one of the fastest developing software companies in Romania, according to Inc. 5000 Europe Ranking 2015 (among the first 1% of the nominees). The company currently operates over 3,000 self-service kiosks, processes over 700,000 transactions monthly, and has agreements in place with several Service Providers such as the major Utility Providers, Telco’s, and Public Authorities. That led to a direct integration of these third parties APIs with the SelfPay platform, allowing users to access and pay their preferred Service providers from a SelfPay payment station.

  • Salarium – the first platform of salary advance payment and financial education in Romania. The company estimates that in the first year of activity it will grant salary advances of 400,000 euros and aims to enrol at least 6,000 employees in the platform. Also, by the end of the year, the platform will integrate with the purpose of process automation, with at least two payroll companies.

For the moment, Romania's fintech sector is still dominated by banks. But fintech startups are posing a real challenge to the status quo. There are more and more fintech products developed. And more and more foreign and local capital invested. Plus, more international actors are seeing the opportunity the Romanian market represents.

In 2019, Romania became the second market for Revolut. They reached over 1 million users and a growth of 400% in the second half of the year.

While there are important growth opportunities, the sector also faces drawbacks. International competition for one. While at home, one of the most important is the pressing disparity between rural and urban areas. While smartphones are ubiquitous in rural areas, internet connection is slow. Plus, smartphones used are not always the latest model. A series of financial services can be developed for these under-served communities. 

Another disadvantage is the expansion of Romanian fintech is its geographical position. Startup valuations are lower, compared to counterparts in Central or Western Europe.

To help startups overcome these challenges, a national association was born in January 2020. 16 Romanian Fintech companies came together and founded the Romanian Fintech Association – RoFin.Tech.

This was doubled by another trend in the fintech market – the syndication by local Angels Investors, especially within the existing Angel clubs: Transylvania Angels Network, Tech Angels, Growceanu, TBNR. And the emergence of Seedblink, the largest equity crowdfunding platform in Romania.

Also, Fintech startups can join a dedicated acceleration program – NEXT FinTech. The program is run by Techcelerator, the country's biggest acceleration company. NEXT Fintech brings together stakeholders such as the Development Facility of the European Fund for Southeast Europe (EFSE DF), Google for Startups, GapMinder VC, TechAngels, RoFin.Tech, Stripe, and the Department for International Trade at the British Embassy in Bucharest.

About Cristiana Bogățeanu 

Cristiana is Executive Director at ROTSA (Romanian Tech Startups Association) and has over 15 years experience in startup training, tech/agile project management and business consulting. In addition to her role, she has mentored dozens of people with entrepreneurial aspirations and decision-making and material independence, thus contributing to the development and consolidation of the Romanian culture and entrepreneurial environment. Throughout her mentoring and training career in innovation and technology she coordinated the teams that won numerous tech and innovation awards such as: Two prizes (III & IV) at Da Vinci 2016 - Innovation Contest, Second Prize at HackTM 2014, 1st prize of Yahoo Open Hack 2011, Webstock Prize 2011, Inventika 2011, etc.

In 2011 she contributed to the creation of the first IT educational hub for highschool students in Romania and after a few years co-founded DeviceHub.net, one of the most promising startups in Romania on Internet of Things. 

About ROTSA (Romanian Tech Startups Association)

ROTSA (Romanian Tech Startups Association) is a non-profit organisation that aims to promote, support, and represent the interests of technology startups in Romania. ROTSA, by collaborating with the main players in the national ecosystem of technology startups, carries out the national mapping of the tech startups in Romania, in an effort to generate data related to the status and evolution of the tech start-up companies. 

ROTSA's vision is to develop and support the ecosystem of technology startups, while also being a connector for the main players and a link with other international ecosystems. The objectives of the association are: promote the professional, economic and social interests of technology startups in Romania; promote at European level the technology startups in Romania by affiliating to European networks and partnerships; developing a tested incubation model that can be replicated locally; facilitate dialogue between technology startups and funders, whether public or private, in order to determine and understand funding needs. 

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: fintech, startup, COVID-19, blockchain, mobile banking, digital banking
Categories: Banking & Fintech
Countries: Romania
This article is part of category

Banking & Fintech

Industry Events