The experts at Ukraine’s Tempo France fintech firm believe that there are two main driving factors for East Europe’s payment market: the expansion of Ukraine’s fintech and financial companies into the segment; and a significant number of high class specialists who are settling in the surrounding countries such as Poland, Hungary and Romania.

“Historically, Ukraine has a great level of education in technical and maths disciplines. This found great applications in the development of Ukrainian fintech and IT,” said the head of marketing for Tempo France, Yuriy Synenkyi.

After the war broke out, over 8mn Ukrainians moved out of the country, and over 5mn fled to neighbouring Poland. More qualified specialists moved to Hungary and Romania, where living costs are relatively inexpensive but where their presence in the EU makes it easy for them to communicate and find new clients, participate in fintech events.

“They have much greater opportunities to demonstrate the advantages of their products and services,” Synenkyi adds.

The start of the war against Russia was the catalyst, but the process was also driven by relatively low personal and corporate taxes that encouraged the decision to relocate to the Eastern part of the EU and the opportunity to recommence work using skills previously accumulated.

Synenkyi says that Ukrainian companies started opening branches and affiliates in Eastern European countries in the spring of 2022, when top managers realised that the war might last too long to simply wait it out.

By the end of last year, the Ukrainian companies also realised that the Ukrainian diaspora in such Eastern European countries as Poland are big enough to provide the necessary labour pool and will probably continue to grow. While the Ukrainian market shrank, in Eastern Europe a new niche for activity opened up.

Ukrainian IT and fintech companies started filling the niche quickly, establishing affiliated companies and helping highly skilled professionals move. With no end to the conflict in sight, Synenkyi says that for almost 80% of fintech companies moving abroad became a matter of survival.

A common strategy has been to kick off by offering competitive services within the diaspora and then to move on to attract non-Ukrainian clients in the next stage.

“And it is not a difficult task at the beginning. People naturally tend to get the products and brands they are used to. They want to use the same language services and no time is needed to adopt and learn to use new ones in a foreign language,” says Synenkyi. “Besides this, if we are talking about payment and fintech, the Ukrainian services feature a lower level of conservativeness than their Eastern European counterparts. It is very easy for them to be competitive.”

Amongst recent examples of the expansion are Monobank and NovaPay, a part of the highly successful logistic group, Nova Pochta, that is moving into the Polish market.

The economic migration to Eastern Europe of sought-after specialists, affects not only the Eastern European region but the EU generally, said Dmytro Oliiyk, senior officer of strategic and business development for the Cyprus-based fintech company, Armenotech.

“The centre of gravity in the tech world has shifted eastwards in the EU payment segment. It applies to all spheres ranging from payment processing and blockchain to new solutions, IT approaches and HR aspects,” Oliinyk says, adding that the shift is colouring everything. “We are talking about a vast number of very qualified specialists joining Eastern European companies, new high-profiled [Ukrainian] companies exploring the Eastern European market, bringing their visions and their products. The whole market is becoming more and more competitive and the companies from the Western part of the EU have to face it and stand against the competition.”

“I should say that this trend would contribute to a 2% to 5% decline in rates in the short run, and up to 3% in the course of the next two years.” Oliinyk of Armenotech said, adding that this trend will remain relevant for at least the next two years.