RegTech: New authorisation smart tool for potential financial market participants
The Bank of Lithuania has introduced an e-licensing tool that makes submission of information necessary to obtain an operating licence quicker, easier and less expensive. Currently the tool facilitates the process of applying for e-money and payment institution licences and new enhancements for applications of other licence types are under way. The solution should eventually become the main platform for information sharing and cooperation between the Bank of Lithuania and financial market participants.
“Aiming to create an innovation-friendly, attractive and competitive environment for financial sector regulation, we were among the first in the EU to introduce a RegTech system for submitting applications for operating licences. We hope that it will further accelerate the authorisation process and ease the administrative burden for potential financial market participants,” said Vytautas Valvonis, Director of the Supervision Service at the Bank of Lithuania.
According to Mr Valvonis, given the fast expansion of the financial sector spurred by new market entrants, such as FinTech businesses, the number of applications for licences has increased markedly over the last few years. Seeking to speed up standard procedures and ensure efficient use of supervisory resources, at the same time maintaining the high level of transparency requirements, the Bank of Lithuania is actively implementing various electronic tools, including RegTech solutions.
Once the specific type of licence is chosen, the new system automatically generates a list of necessary documents as well as provides explanations on how and what information should be disclosed. It also allows applicants to save a partially completed form and come back to it once all relevant information and documents are ready. All this is done remotely, logging in to the system using internet banking or other login methods supported by E-Government Gateway, which is especially handy for foreign businesses wishing to set up in Lithuania as all paperwork is done entirely online. The system will show the status of the submitted documents at any given time. This saves time for both the applicant and the regulator since only properly formed applications are deemed fit for examination. In addition, applicants will no longer be required to submit paper copies of the original documents.
The new tool has been created in line with the latest amendments to the rules for issuing licences to electronic money and payment institutions as well as branches of foreign electronic money institutions. The majority of recent applications sent to the Bank of Lithuania were precisely for such licences. The new rules provide for a simpler and more convenient application procedure and lay down the requirements for the content and format of the accompanying documents. To the extent possible, they harmonised application requirements in terms of licences for branches of foreign (non-EU member state) electronic money institutions.
Since the beginning of 2017, FinTech firms have already been issued nearly 50 licences, with another 30 currently under examination. With all necessary documents submitted, it takes only 3 months to obtain an electronic money or payment institution licence, virtually the fastest turnaround in the EU (in other EU countries, the process may take more than 12 months).
The Bank of Lithuania has implemented a one-stop shop in terms of meetings and consultations with potential financial market participants. Information on licensing opportunities in Lithuania is presented on the Bank of Lithuania website (Newcomer Programme).
The Bank of Lithuania aims to become a financial sector partner encouraging innovation and sustainable financial market growth. Implementing state-of-the-art solutions and reducing administrative barriers, it seeks to create a favourable regulatory environment that promotes supportive supervisory practices.