You are here

UK fintechs find friendly business environment in Lithuania

By AFP - Feb 21,2021 - Last updated at Feb 23,2021

Rockit CEO Sarune Smalakyte speaks during an interview at the offices of the Rockit workspace for FinTech founders in Vilnius on February 12 (AFP photo)

VILNIUS — Thanks in part to Brexit, Lithuania is becoming a fintech hub as a growing number of UK-linked digital financial companies are getting licences there so they can continue to operate in the European Union.

The Baltic eurozone state with a population about a third the size of London is now leading the EU in fintech with over 230 companies, according to the Invest Lithuania government agency.

Some two dozen have links to Britain.

One of the first to come after the 2016 Brexit referendum was London-based Revolut bank.

"Lithuania is currently a hub for our European operations after Brexit," Virgilijus Mirkes, CEO of Revolut Bank in Lithuania, said.

"We opened our Vilnius office in 2017 after considering the fintech-friendly business environment," he said, pointing to a speedy licencing process and good local talent.

Invest Lithuania estimates that the sector employs more than 4,000 people in the country — an increase of more than 18 per cent in the past year.

"During the Brexit transition period, fintech companies began to search for an alternative EU harbour and thus Lithuania has become one of their primary options," said Jekaterina Govina, a senior official in charge of supervision at Lithuania's central bank.

 

'Continue to scale' 

 

Lithuania says it can process licence applications in as little as three months, more quickly than anyone else in the EU.

The central bank has granted a total of 118 fintech licences allowing companies to operate anywhere in the EU — far higher than Germany with 77 licences and France with 76, according to a report from Invest Lithuania.

Britain is still first by far with 610 licences.

Lithuania's central bank has also set up a "regulatory sandbox" — a framework to allow fintech companies to test out innovations.

"That was a lighthouse for companies searching for a cure for Brexit," Govina said.

While the capital Vilnius does not offer the big city attractions of London and getting there is tricky at the moment because of coronavirus restrictions, internet speeds in Lithuania are good and it has a tech-savvy workforce.

Revolut employs some 200 people in the country, including in product development and customer support, and Mirkes said the company would "continue to scale [up] our operations here".

Revolut started its operations in Vilnius in a gleaming glass-fronted office hub called Rockit, which is funded by Swedbank and provides workspace and industry events for some 30 member companies.

"Our hub helps to create a fintech community where foreign companies can easily find local partners," Rockit CEO Sarune Smalakyte told AFP during a recent visit to the space.

 

Need for 

firmer approach 

 

But the push into fintech also comes with risks.

Sergejus Muravjovas, CEO of Transparency International Lithuania, said "the ambition to become a fintech centre comes with a responsibility to take money laundering prevention to a new level.”

"There is a need for a firmer and more data-driven approach from monitoring the institutions involved," he said.

Govina said the authorities were "fully aware" of their responsibilities as a licence in the Baltic state opens the gates to the entire EU market.

Another company that has recently set up in Lithuania is London-based DiPocket Group, which has developed an e-money wallet app.

"Brexit was definitely the trigger event," said DiPocket CEO and co-founder Fedele Di Maggio.

He said he found the central bank "both strict and supportive" and described the local workforce as "generally English-speaking and with reasonable financial expectations".

up
22 users have voted.

Add new comment

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
3 + 8 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.

Opinion

Newsletter

Get top stories and blog posts emailed to you each day.