With its Adriatic coastline and breathtaking landscapes, Croatia is a Balkan country best known as a tourist destination. But now its fintech sector, particularly digital payments, is also starting to make its mark.
When Microblink, an R&D company based in ZagrebCroatia, started in 2013, had to rely on the finances of its founders, because external investment was difficult to find.
But a year later, the company had its first big success: Photomath, an educational app that reads and solves math problems using the camera on mobile devices. Over the years, the application has had over 100 million downloads and received more than 5 million euros ($5.95 million) in investment.
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Today, Microblink operates across the United States, Europe, and Southeast Asia, developing AI-driven data analytics and extraction products that are used by more than 100 million users finals.
The company primarily works with banks and mobile banking software providers, who then implement Microblink technology into their own mobile applications.
Microblink has also received numerous accolades from the fintech industry over the past few years. In 2019, Deloitte ranked the company among the 500 fastest growing companies in the Europe, Middle East and Africa region.
“We have made a name for ourselves in the fintech industry, which will always hold a special place in our heart. In fact, our first product, PhotoPay, revolutionized the field with simplified bill payments,” said Jurica Cerovec, co-founder and CTO of Microblink. tells ZDNet.
The company’s success also set the stage for other Croatian companies ready to test themselves in the fintech market.
Another Croatian success story is Electrocoin, a cryptocurrency brokerage based in Zagrebwith an annual turnover of around €35 million ($42 million).
The company has created a payment service that allows any store to accept cryptocurrency payments for free. The service was recently introduced in the Croatian town of Sveta Nedelja, where residents can pay local taxes and fees in crypto, making it the first city in the EU to offer such a payment option.
With the Croatian digital payment sector expected to represent 2 billion euros ($2.38 billion) in transactions in 2020the potential of the fintech scene in this small Balkan state, with a population of only four million inhabitants including more than 30,000 active technology professionalshas not gone unnoticed by investors.
“Croatia has seen a considerable improvement in its fintech scene in recent years, which is mainly due to people developing their digital skills themselves,” says Vlaho Hrdalo, president of the Croatian Association for Blockchain and cryptocurrencies.
“Investors are starting to notice the digital skill levels of young Croatians and are starting to turn their attention to Croatia. When I spoke to a venture capital fund, they told me they would transfer money in Croatia because they thought it was similar. in Israel 10 years ago – “lots of brains and no serious money”https://www.zdnet.com/article/fintech-just-made-a- big-leap-forward-in-this-tiny-country-Here’s why/.”
In fact, Croatia is actually using the Israeli example when it comes to growing its fintech scene. Last year, the two countries signed a fintech collaboration agreementwhich aims to expand cooperation and encourage innovation in the sector.
On the software development side, the talent is there. But most Croatian companies still need to focus on their business skills, which is currently lacking, believes Ivan Brezak Brkan, a Zagreb-based branding analyst and consultant.
“As with the rest of the Eastern European startup scene, it is business skills and growth that are proving most valuable. A skill that is undervalued in the post-COVID-19 era is without any doubt content creation, inbound marketing and thought leadership,” Brezak said. Brkan told ZDNet.
“Most fintech companies in Croatia are B2B and have used events, such as conferences, for their sales. Now, with virtual events unable to fill the void, these companies must focus on content marketing as a business sales tactic – and they have. no experience in this area.”
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With most fintech companies in Croatia targeting foreign markets, Croatian laws, most of which are in line with those in the EU, such as the Payment Services Directive (PSD2), allow companies to be competitive in the vast financial technology market.
“Since we implemented the PSD directive which has been in force for some time, I hope that we will soon have a lot of new ideas and proposals as well as value-added services,” expert Marko Rakar told ZDNet in technology based in Zagreb.
With the country lacking strong legal frameworks to govern fintech, blockchain and artificial intelligence, Croatia has attempted to take a more tolerant and laissez-faire approach to regulating these industries, according to digital lawyer Hrdalo.
“However, without clear rules in place, digital businesses in Croatia have to discover for themselves where they touch the regulatory perimeter, which is not always the best path forward,” he notes.
