Fintech's Role in Regional Value Chains in the Western Balkans

Digitalization and automation are reshaping global value chains (GVCs) by enhancing resilience, transparency, and sustainability.
This paper investigates the role of fintech solutions in establishing regional value chains (RVCs) within the Western Balkans.
It aims to determine whether businesses adopting fintech possess better chances of creating RVCs compared to those that do not.

GVCs are becoming more fragmented, involving various small and medium-sized enterprises (SMEs) across multiple countries.
Each stage in GVCs adds value to the production of goods or services.
Fintech has emerged as a significant innovation, impacting GVCs by allowing for real-time financial transaction tracking and management.

Fintech enhances operational transparency, reduces costs, and increases efficiency in GVC operations.
The technology facilitates the use of digital records for trade, promoting fluidity in financial management among various stakeholders.
Applications like smart contracts simplify transaction processes, benefiting businesses through reduced operational expenses.

The EU's Regional Innovation Agenda aims to bolster RVCs in the Western Balkans by promoting industries capable of integrating into GVCs.
RVCs serve as vital platforms for local economies, encouraging investment, reducing poverty, and promoting sustainable growth.
Participation in RVCs exposes enterprises to innovative technologies and practices, enhancing their competitiveness.

GVCs necessitate complex coordination among parties involved in production and distribution.
Fintech solutions empower enterprises by allowing faster transactions and access to real-time data, which is critical for competitiveness.
Digitalization influences regionalization by inviting investments and fostering stronger economic ties.

The study utilizes a benchmarking approach encompassing financial ratios from 370 enterprises, assessing their operational performance influenced by fintech.
Financial indicators are critical for understanding enterprise sustainability and competitiveness.

The analysis includes a survey designed to collect data on finances and fintech adoption, targeting enterprises that operate in multiple markets and employ several fintech solutions.
Benchmarking helps identify industries with a high potential for creating RVCs based on financial performance metrics.

The majority of enterprises show medium to low potential in developing RVCs, particularly in subindustries like automotive retail and home improvement.
High potential industries include hospitality, apparel, and food retail, benefitting from increased e-commerce activity due to fintech innovations.
Obstacles include regulatory constraints and limited digital infrastructure, which hamper fintech adoption and integration.

The integration of fintech into the financial operations of Western Balkan enterprises plays a crucial role in enhancing operational performance and industry competitiveness.
Recommendations include fostering a supportive regulatory environment and enhancing infrastructure to promote fintech use and collaboration among enterprises.
Greater emphasis on education around fintech innovation can improve regional RVCs, leading to better integration into GVCs, further bolstered by technological advancements in AI and blockchain.