Reaching for the summit Sergey Panteleev, General Manager at Varengold’s branch in Bulgaria, tells us why outsiders have got it so wrong when it comes to the region Central and Southeast Europe is not typically regarded as prime investment territory for fintechs. But Varengold Bank, having already developed a strong track record in European marketplace banking and providing long-term, sustainable support for fintechs and peer-to-peer (P2P) lending platforms, chose Bulgaria in 2018 as a hub for extending its activities in Central and Eastern Europe (CEE) and the Balkans. Its mission? To seek out emerging technologies in an area that has witnessed a significant amount of digital as well as non-digital disruption. According to Sergey Panteleev, who heads up Varengold’s Bulgarian office, the conflicts and upheaval that scarred this region in the late twentieth century are one of the reasons the bank is there. “Eastern European countries were on www.fintech.finance
the wrong side of the Iron Curtain so, when it fell, lots of entrepreneurial spirit was unleashed,” he says. Different countries went at different speeds towards what he describes as ’liberated capitalism’. But Bulgaria was out in front. It had already invested heavily in technical training in the Seventies, which sowed the seed for a strong digital payments sector to emerge, one that was attracting global research and development funding by the dawn of the Noughties. Homegrown international businesses to have earned widespread recognition since include Paysafecard, SafeCharge, SumUp, EMerchantPay, iCard, Epay and Paynetics, not to mention online trading platforms Trader.bg and Trading 212, which operate in both Bulgaria and the UK. In August, Paynetics AD, digital banking platforms provider Phyre and Bulgarian telecoms provider Vivacom, launched the Mastercard Digital First card – the first payment card of its kind in Central and Eastern Europe and one of the first in the whole of Europe. “We have 70-plus fintechs here in Bulgaria and more are popping up every day,” says Panteleev. “Of course, COVID slowed things down a bit, but it was inevitable that we should come here to join this fast-growing fintech community.” It’s nevertheless a community that’s been largely overlooked and
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under-reported by the fintech world. That could change following publication of Findexable’s Global Fintech Index – the new fintech world rankings which shook up perspectives on the region by placing Lithuania fourth on the list (behind the US, the UK and Singapore, and just ahead of Switzerland). While Bulgaria itself didn’t make the top 50, Bulgarian fintech leaders would do well to prepare themselves for the spotlight – their country has the fastest-growing fintech market in Southeast Europe (SEE). The fintech sector’s contribution to GDP has more than doubled since 2014, and last year their net income reached €212million. “We have a strong startup ecosystem,” explains Panteleev. “Historically, Bulgaria was under the influence of the Soviet Union, which gave rise to IT specialism. Then, in recent years, institutional investors came in – creating fertile ground for fintech. In the beginning, it was a matter of copying and pasting [from Western Europe], but now we are integrating new models and are really booming. This is the sweet spot for us: to provide funding to businesses that, for some reason, are not able to get it.” In many ways, the region is the perfect fintech and paytech petri dish – plenty of university graduates who specialised in technology, lower fixed costs than Western Europe and accessible markets – which is why so many Western companies outsource to the area. Many employees of London corporations wearily dial what they think is their internal IT team when their computer crashes, only to reach an advisor in Bulgarian capital Sofia. Issue 6 | ThePaytechMagazine
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