This abstract was written by Aleksandr Gevorkyan.

There are three immediate constraints to the recent rise in financial technology (FinTech) in the small open economies of Eastern Europe and former Soviet Union.

First, much of the continued growth and local implementation of FinTech-driven innovation is constrained by the structure and conduct of the domestic financial sectors.

Second, central banks, currently enjoying broader macroeconomic policy mandates than peers elsewhere, may be caught off-guard balancing further financial deepening, as domestic financial credit swells, and sustaining challenges to foreign exchange markets balance.

Finally, the third constraint to FinTech’s growth is technological, implied in the limited ability of the firms in the local high-tech sectors to source from domestic innovation and talent pool, further limiting sector’s solidification domestically and minimizing sustained global presence.

As such, despite recent attention from the global business community, the scalability of FinTech’s innovative potential for transition economies remains uncertain with lessons for smaller emerging markets prioritizing financial technology growth.