FinTech licensing boom: FinTech businesses discover the world of opportunities in Lithuania
Having kick-started its ambitious goal of becoming a FinTech hub in the Nordic-Baltic region, Lithuania has already caught the attention of several dozen companies wishing to acquire a financial institution licence in the country. Since 2016, more than 20 companies have been granted authorisation, with quite a few more applications currently under review.
‘It seems that the global FinTech sector has heard our message loud and clear: with the Bank of Lithuania acting as an accessible regulator, maintaining an open attitude towards innovation and ensuring one of the fastest licensing regimes in the EU, Lithuania is a perfect place to start and grow an international FinTech business. As a result, the interest of both foreign and local companies has peaked’, said Marius Jurgilas, Member of the Board of the Bank of Lithuania.
In the first half of 2017 alone, FinTech companies were granted 13 operating licences, which is already more than last year’s total. Another dozen companies have submitted applications, meetings with numerous interested parties are taking place.
Mr Jurgilas believes that close cooperation between public authorities responsible for development in the domestic financial sector as well as the country’s visibility in the global arena promoted by private partners (such as law firms, business accelerators, etc.) are among the key factors behind Lithuania’s success.
According to Mr Jurgilas, foreign companies are particularly interested in obtaining a specialised bank, electronic money or payment institution licence that would grant the right to operate across the EU. This is especially true for companies in the post-Brexit UK: some of the UK-based and -authorised businesses see Lithuania as a potential base should they need to relocate their EU operations. Companies reaching out to the Bank of Lithuania are geographically widespread – from Latvia, Estonia and Poland to the US, Canada, Australia, China, Israel, Singapore and other countries maintaining a robust pace of expansion in the FinTech sector.
According to investors, these are the main four advantages that Lithuania brings to the table:
1) relatively easy and low-cost authorisation process. Following submission of all necessary documents, it takes only 3 months for the Bank of Lithuania to take a decision on the issuance of an electronic money or payment institution licence. In other EU countries, the process may take more than 12 months;
2) access to the Bank of Lithuania payment infrastructure, allowing payment and electronic money institutions provide payment services without a middleman;
3) highly-qualified talent pool. Many investors believe this to be one of the decisive factors in choosing Lithuania for launching a FinTech business;
4) guidance and cooperative attitude maintained by the Bank of Lithuania. The Bank of Lithuania has implemented a one-stop shop in terms of meetings and consultations with potential financial market participants. Prior to launching a business or a new product, investors may check whether their future plans are in line with legislative requirements. Information on licensing opportunities in Lithuania is presented on the Bank of Lithuania website under section How to obtain a licence.
Seeking to promote and welcome to the domestic market new financial products and solutions that are consistent with the ever-changing public needs, the Bank of Lithuania is planning to create a ‘regulatory sandbox’ for financial companies. It would allow companies that meet certain criteria and have successfully completed a rigorous selection process to test their innovative creations in a Bank of Lithuania-controlled environment, with no regulatory sanctions. Only then would the company decide whether to bring the product to a wider audience.
‘We have made good progress, yet we still have a long way ahead of us. Only through consistent work with all responsible authorities can we actually establish ourselves as a hub for financial innovations’, said Mr Jurgilas.
Development of a FinTech-conducive regulatory and supervisory ecosystem as well as fostering of innovation in the financial sector is one of the Bank of Lithuania’s strategic directions for 2017–2020. Together with other state authorities, the Bank of Lithuania aims at creating a FinTech-friendly environment that would attract new companies and encourage them to incubate new products in the country.