The payments landscape in Eastern Europe is very diverse, with individual countries across the region still finding their economic identity as they develop their internal infrastructure at different rates following the fragmentation of the Soviet Union nearly three decades ago. In some countries, long periods of economic instability in the region have led to payment environments whereby large multinational financial institutions (FIs) have taken advantage of the lack of national institutions and become the leading FIs in the region, while younger, local FIs have been unable to compete with these giants and, as such, only have a much smaller share of the market.
The infiltration of larger, international giants has had a direct effect on the level of innovation seen by local FIs across Eastern Europe, whose main focus, in response, has been simply to provide a reliable banking service to their customers comparable to those already on offer. However, we are now at a time where these levels of instability have ceased and local FIs need to take steps to address the disparity between them and implement systems that allow them to innovate quickly and be more flexible than their multinational rivals. This is the perfect time to mount a challenge, find a USP, and grow market share.
While larger players are generally slower at rolling out new products and services due to the volume of work required and the fact that they often still run on legacy systems, the agility of smaller FIs, not hindered by the scale of the task or the bureaucracy, means they can quickly carve out a niche in their own market, offering something that the larger banks cannot. This could be greater personalisation, an intuitive digital offering, or even just a more effective, tailored customer experience. Their ability to innovate quickly gives them the opportunity to put the end customer first and adapt their approach specifically for the region in which they operate, and while they may lack revenue and resources when compared with more established global FIs, they do not necessarily share the same constraints when it comes to their systems.
Whichever niche young, small FIs in Eastern Europe choose, it is clear to see that now the dust has settled following the region’s period of economic instability, they are in a great position to take on the large multinationals that have dominated the landscape for so long.