Financial Services

It’s hard to overstate the enormous role Estonia’s banks have played in creating and promoting the nation’s e-government solutions. Banks not only wholeheartedly embraced eID, encouraging customers to use their ID cards for secure transactions and giving away free card readers, they also helped move the population online by developing and offering high-quality internet banking services. In addition, banks have partnered with telecoms to invest in Look@World, a project that provides free, two-day, basic computer literacy courses to adults. As much as 10% of Estonia’s adult population has undergone the courses, which were held in 2002, 2009 and 2010. The results of these efforts are staggering. Today, an incredible 99.8 percent of all banking transactions in the country are carried out online.

After the Pension Reform in 2003 banks started promoting Pension savings and funds as well as raising awareness of financial planning options and ways to improve quality of life after the retirement. The new system consists of three pillars: state part, percentage paid from the salary plus governmental additional investment and a complimentary long-term investment plan to the pension funds. Today with e-Pension account, customers can easily monitor their state and private pensions as well as switch their pension plans online, invest to complimentary third pillar as well as invest into more risky funds online.

Saving time, saving money

The transition to an online banking environment has been a windfall for the banks. With fewer than 1% of bank transfers now carried out in person, banks have been able to close branches, reduce operational costs and optimize working efficiency. Clients also benefit from the convenience of having user-friendly online services available 24/7, a vast improvement over typical banking hours. In contrast with the US, where a third of money transfers are still carried out by writing and mailing checks (which can take five days to process), Estonia’s customers use a system that is simple, secure and nearly instantaneous.

Convenient features of this system include e-Invoicing, an automated bill payment system used by major utility companies, and e-Tax transfer verification, which allows online banking systems to be used as a secure gateway for tax filing. More recently, mobile-banking (using secure identification through Mobile-ID) has brought online banking to the smart phone, giving Estonian customers an opportunity to use the service absolutely anywhere. With this innovation, Estonia now has a more advanced internet-banking system than is available even in the Nordic countries.

Apart from making life easier for customers and businesses, the widespread use of online banking has had a far-reaching impact on the nation as well, creating a more transparent economy, reducing the share of the gray economy and preventing money laundering.

Opportunities for investment

It’s an accepted fact that well-developed and well-functioning capital markets are essential for fostering economic growth and increasing prosperity. And thanks to ICT, that is exactly what Estonia has created. Buying and selling securities is as easy as it can be – just a few clicks on your internet banking account is all you need to complete a trade. That makes investing uncomplicated and easily accessible for everyone. Better still, Estonia’s innovative financial services technology, based on over 20 years of greenfield development experience, is now available for export. A portfolio management system, retail banking systems and the Erply and Directo accounting systems are only some of the innovative and user-friendly IT solutions that have been successful on the international market. Alongside with the fact of 0% tax paid on reinvested profits creates great climate for business and investment in Estonia.

To learn more about opportunities in Estonia visit Finance Estonia homepage.