ROMANIA: An Introduction
The Romanian Fintech Sector
The fintech sector in Romania has displayed impressive resilience and innovation in recent years, sculpting its own place in the modern Eastern European economy. As the country embraces technological breakthroughs and digitisation, a wide range of factors – such as financial circumstances, regulatory frameworks and emerging trends – affect the potential of and challenges to fintech businesses, customers and the legal ecosystem at large.
In recent years, the Romanian fintech industry has joined the worldwide movement to create a cashless society for the future. To make this proposal a success, the vast divide between the urban and rural sectors, who continue to rely on traditional payment systems, must be bridged.
In the last five years, the Romanian tech market has offered valuable products both for the national and international markets. Highly technological solutions, especially for sectors such as blockchain, crowdfunding, crypto, banking, e-commerce, accounting, lending, payment gateways, energy, real estate, healthcare and insurtech, have been made available.
Considering that Romania is part of the EU and falls within the scope of EU regulations, the financial technology sector is currently going through a period of significant transformations, influenced by the recent adoption of two major regulations: the Artificial Intelligence Act (AI Act) and the Markets in Crypto-Assets Regulation (MiCAR).
Along with these new regulations and the associated changes that come with them, fintechs need to adapt their existing operational processes and technologies in order to comply with the new requirements and at the same time to seek new opportunities to expand within the regulatory boundaries. Such developments have the potential to transform the entire landscape of the industry, where responsive expertise meets rigorous market demands and robust innovation.
Economic and Market Trends
Partly in response to the COVID-19 pandemic and lockdown, in Romania, as in many other countries, the adoption of online services has significantly accelerated, stimulating innovation in various sectors, especially in healthcare and insurance technology (insurtech), encouraging companies to gradually introduce into their activities AI-based blockchain systems, digital hubs and even experimental solutions such as NFTs and metaverse applications to improve customer care. This transformation has been accompanied by a growing public interest in technology investment, with rising demand for digital asset management, custody and AI solutions.
In recent years, in terms of market development status and fintech innovation trends, the Romanian market has been widely recognised as a potentially promising investment opportunity for foreign companies and investors to develop technology businesses, while national fintech “unicorns” (private companies valued at over USD1 billion), such as UiPath, have begun to emerge.
One of the most dynamic segments of the fintech sector is crowdfunding, which has rapidly developed into an attractive alternative financing mechanism. As an emerging participant in the European crowdfunding landscape, Romania currently has 33 platforms authorised by the Financial Supervisory Authority (ASF) – five local platforms and 28 passported into Romania. The Crowdfunding Regulation (EU Regulation 2020/1503) has made it increasingly attractive for Romanian platforms to bring over foreign investors, while giving businesses access to a wider pool of capital by harmonising procedures across the EU. This regulatory certainty creates exciting opportunities for local business owners and investors alike.
Blockchain and crypto-assets together represent another important sector that is rapidly developing in the fintech landscape of Romania. Currently, Romania is actively hosting a wide portfolio of blockchain and crypto projects that range from innovative DeFi platforms to tokenised asset solutions and payment systems. These have drawn the attention of not only local but, more importantly, international industry players to the potential of Romania concerning technological innovation and resilience in this dynamic field. The newly adopted MiCAR, has been a turning point for the industry, as it indeed puts a harmonised regulatory framework in place that enhances legal certainty for businesses and investors, while cross-border collaboration within the European Union is promoted.
Legal and Regulatory Landscape
Romanian legislation does not provide a specific legislative package for fintech businesses. However, the characteristics of fintech businesses may fall within the scope of strictly regulated activities, such as issuing insurance policies, granting loans, holding and facilitating financial transactions, as well as developing conversion and payment portals, crowdfunding services, etc.
In the majority of cases, the relevant supervisory authority’s authorisation is required, and no exception or derogation regarding the KYC and AML European standards is allowed.
However, the principle of technological neutrality also applies here, ensuring that the activity being performed – rather than the technology of reference – determines the appropriate legislation. This implies that where service providers only provide the relevant operators with the basic infrastructure, they might not be governed by certain laws.
The key recent EU regulations that are currently transforming the fintech sector in Romania are (i) the Artificial Intelligence Act (“AI Act”), MiCAR and the EU Crowdfunding Regulation (ECSPR). The AI Act was adopted in August 2024 and outlines ethical standards for the use of AI, which has an influence on fintech companies that are using AI for customer support, alongside with fraud detection. MiCAR requires robust KYC and AML systems, which can be difficult for small businesses, but it has long-term benefits such as fostering market stability and promoting wider adoption of digital assets. It creates uniform regulations for cryptocurrencies, increasing transparency and security. The ECSPR is driven by the desire to create a more accessible marketplace with a single EU-wide regime, thereby eliminating divergent national rules for investment-based crowdfunding (in relation to securities) and peer-to-peer crowdfunding. Through debt crowdfunding, the company is assuming the interest and operating costs generated by the funding, as well as a stable cash flow to have the ability to pay, in exchange for equity funding that has no mandatory or fixed payments.
The Upcoming Trajectory: Challenges and Opportunities
Notwithstanding its achievements, the Romanian fintech sector continues to face a number of challenges. Start-ups generally tend to be insufficiently funded and typically have weak security measures put in place, which can discourage users concerned about data protection and security fraud. These hurdles can be overcome only when cybersecurity is strengthened and increased confidence is promoted.
Moreover, traditional finance institutions are suffering because of the rapid movement towards alternative fintech options. Companies in the fintech industry can outshine existing companies due to their flexibility and innovative approach. Whichever the case, there is a time factor to consider when new businesses take time to expand their operations and infrastructure to accommodate more users resulting from this disruptive transition.
However, with the coming of regulatory support and start-ups overcoming everything from funding to security challenges, Romania’s role in the fintech landscape will only get stronger. It is thus a facilitator of new opportunities, cross-border opportunities, and investment, driving innovation and growth across the sector.
It is expected that Romania will continue to be one of the top players in the fintech area, which will continue to expand and attract new investors. With a growing tech ecosystem within the country, supported by both a qualified workforce and increasing regulatory alignment with EU standards, Romania is in a privileged position for future growth.
In order to fully achieve this full potential, stakeholders need to address existing challenges, including regulatory compliance, cybersecurity and rural-urban disparities. Collaboration between the public and private sectors, together with targeted investments in education and technology, will be key to maintaining Romania’s competitive advantage.