Across the Western Balkans, small and medium-sized enterprises (SMEs) account for over 99 percent of firms and between 66 and 83 percent of employment. Yet a fragmented financial landscape makes it difficult for many of them to access the payments, credit, and digital tools they need to grow. Fixing that is not just a technical problem. It is a jobs agenda.
Digital Finance as an Economic Enabler
For a small business, access to digital financial services can be transformative. Faster, cheaper payments reduce operating costs and improve cash flow. Digital transaction records allow lenders to assess creditworthiness based on actual business activity rather than collateral alone, helping unlock financing options that were previously unavailable. Interoperable payment systems make it easier to trade across borders and reach new markets, while simplified digital onboarding lowers the administrative burden of operating formally.
For firms considering expanding, hiring new staff, or investing in new equipment, these improvements can be decisive. The Western Balkans has the conditions to benefit from these gains: mobile phone penetration is high, internet connectivity is widespread, and a growing share of consumers and businesses expect fast, seamless digital experiences. The question is whether the financial infrastructure can keep pace.
The Cost of Fragmentation
At present, the region’s financial infrastructure remains fragmented, and smaller firms bear a disproportionate share of the resulting costs.
A fintech company seeking to operate across the Western Balkans must navigate six separate regulatory frameworks, licensing requirements, and technical standards. What could function as a regional market of nearly 16 million people instead operates as a collection of distinct and relatively small markets. This fragmentation discourages investment, slows innovation, and makes it harder for promising solutions to reach the scale needed to be viable.
The consequences for SMEs are direct. Higher transaction costs and slower payment settlement raise the cost of doing business. According to OECD analysis published in 2026, between 10 and 25 percent of SMEs across the region remain credit-constrained, reflecting the limited availability of digital and alternative financing options. Meanwhile, non-bank financing instruments such as leasing, factoring, venture capital, and crowdfunding remain underdeveloped across much of the Western Balkans. In a region where SMEs employ the majority of the private-sector workforce, these are not sectoral inconveniences but constraints on growth and employment.
A Platform for Regional Cooperation
This is where regional cooperation can help translate financial innovation into tangible business outcomes.
One promising step in this direction is the creation of the Balkan Fintech Association, a regional initiative supported by the International Finance Corporation (IFC), a member of the World Bank Group, in partnership with the Swiss State Secretariat for Economic Affairs (SECO). The association seeks to …
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