Daily Management Review

Lithuania Destination Of UK Fintech Because Of Brexit


Lithuania Destination Of UK Fintech Because Of Brexit
With a growing number of United Kingdom linked digital financial companies getting licenses in Lithuania so that they are able to operate within the European Union due to the complexities created by the Brexit, this EU country is fast becoming a fintech hub.
According to the Invest Lithuania government agency, with the presence of more than 230 companies, this Baltic eurozone state country that has a population which is just half of that of London has transformed into a leader within the EU in the area of fintech. 
About two dozen of the fintech companies in the country are of British origin.
The London-based Revolut bank was the first to come to Lithuania after the 2016 Brexit referendum.
"Lithuania is currently a hub for our European operations after Brexit," Virgilijus Mirkes, CEO of Revolut Bank in Lithuania, told the media. "We opened our Vilnius office in 2017 after considering the fintech-friendly business environment," he said, which he pointed out to be a licensing system that is very fast as well as the presence of good talented employees locally.
According to estimates of Invest Lithuania, the fintech sector in the country now employs more than 4,000 people which is 18 per cent more than in the previous 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.
The time taken to process licence applications in Lithuania is less than three months which is faster than any country in the EU, says Lithuania.
According to a report from Invest Lithuania licences allowing companies to operate anywhere in the EU have been given to 118 fintech companies by the country’s central bank compared to 77 such licenses granted by Germany and 76 by France within the same period.
Despite this, with as many as 610 such licenses, Britain is still the first by far.
A "regulatory sandbox" - a framework to allow fintech companies to test out innovations, has also been set up by Lithuania's central bank. "That was a lighthouse for companies searching for a cure for Brexit," Govina said.
The speed of internet in Lithuania is good and the country has a tech-savvy workforce even though its capital Vilnius is far from offering the same big city attractions as in London while reaching the city currently is a bit tricky because of coronavirus restrictions.
About 200 people, including people in product development and customer support, are employed by Revolut in Lithuania. The company would "continue to scale (up) our operations here," Mirkes said.
"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.
However there are also risks involved with the push into fintech.
“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," said Sergejus Muravjovas, CEO of Transparency International Lithuania.