Electronic money and payment institution sector sees significant growth
Electronic money institution (EMI) and payment institution (PI) sector continued to grow in the first quarter of the year. Income from licensed activities of EMIs and PIs, which form the backbone of the licensed Lithuanian FinTech sector, increased 1.8 times in Q1 2022, compared to Q1 2021, to just over €170 million.
This growth was slower than a year ago when income from licensed activities increased more than 4.6 times. The amount of payment transactions grew strongly in the first quarter of the year to €173.6 billion and was double the level of a year ago.
“The development of the licensed FinTech sector continues to be quite rapid. We aim to ensure that institutions properly manage the risks they face as they expand their business, therefore we have a range of supervisory measures in place, and we inform the sector regularly and in a variety of forms about the areas that should be addressed. The analyses of companies from different perspectives carried out last year allowed us to identify their compliance and areas for improvement relating to internal audit, internal control and soundness of the management system. This year, we will repeat these analyses and organise training and consultation events on relevant topics,” says Dovilė Arlauskaitė, Head of the Payments Market Supervision Division of the Bank of Lithuania.
The financial results for Q1 2022 showed that three institutions did not meet the equity capital requirement. The Bank of Lithuania regularly reminds EMIs and PIs about the importance of the equity capital requirement, which must always be met and with a margin, so it takes a strong stance in cases of detected irregularities.
The Bank of Lithuania continues to closely monitor whether credit institutions follow the Position on the right of electronic money institutions and payment institutions to access bank accounts opened with credit institutions. During the period under review, two notifications on account closures or restrictions were received. Since 2019, the Bank of Lithuania received a total of 53 notifications of this kind.
In Q1 2022, eight sanctions were imposed on EMIs and PIs: four fines, two warnings, one public communication of a legal infringement and one licence revocation (cancellation).
At the end of Q1 2022, the public list of EMIs and PIs included 141 institutions (88 EMIs and 53 PIs), compared to 136 institutions (84 EMIs and 52 PIs) in Q1 2021. The Bank of Lithuania is currently examining 25 applications for EMI and PI licences.
The Bank of Lithuania publishes information on upcoming scheduled inspections of electronic money and payment institutions as well as annual and quarterly indicators of compliance with the key operational and prudential requirements for each of them.
In view of the sanctions imposed due to Russia’s aggression against Ukraine and aiming to protect the financial markets of Lithuania and the European Union as a whole, the Bank of Lithuania has cut off the payment infrastructure to Russia-linked payments and additionally assesses the links between financial market participants and Russia.