The fall of the Soviet Union brought about more than a dozen sovereign nations, each taking a distinct path from the other. Lithuania, the first country to regain its independence on March 11, 1990, has already developed its fair share of success stories – spanning from basketball victories to its first unicorn startup – Vinted. The strides made on the intersection of business, science and technology can be best described by the three completely different fields of Photonics, Life Sciences and Fintech.
A perfect storm that shaped Lithuanian Fintech
While Lithuanian Photonics and Life Sciences took decades to establish themselves on the global arena, the country’s Fintech sector managed to fast track itself in the last couple of years. There were, of course, times in the country’s history where the Finance sector had to be agile and flexible – not only through the turbulent 2008-2009 period. The early nineties saw a time, when a temporary currency was used alongside the Soviet ruble, which had to be swiftly changed to a permanent currency – the litas. It then, of course, was replaced by the euro – a process that took a lot of coordination. And, as it turned out, the developed flexibility was what ultimately turned Lithuania into a fintech hub uniting more than 210 companies today.
“Lithuania rolled out a number of incentives for Fintech companies to set up in Lithuania. These include faster processing of pan-European electronic money or payments institution license application, a specialised ‘lite’ bank licence for challenger banks, remote KYC options, generous tax incentives for R&D activities, tax-friendly access to equity, and the list keeps growing,”
explains Vilius Šapoka, the Lithuanian Minister of Finance.
Ultimately, it was a combination of startup and tech-friendly policies (that pledged “1000 startups by 2020”) and an innovation prone regulator that laid out the red carpet to companies. Thus, a national strategy that began with the goal to stimulate competition in the domestic market gave rise to Fintech in Lithuania as we know it today.
“Just four years ago the Lithuanian financial services market was dominated by a few major incumbent banks that weren’t all too eager to bring in new features,”
explains Marius Jurgilas, Board Member of the Bank of Lithuania, and one of the minds that pioneered Fintech in the country.
“We wanted Lithuanian consumers to benefit from the highest level of innovation the financial world had to offer, so we got the ball rolling for Fintech in Lithuania”.
The Bank of Lithuania’s Newcomers Programme, ability to access the SEPA area via their CENTROlink system, and the creation of a regulatory sandbox, were among the decisions that shaped a favourable environment for companies to develop new solutions. In the years that followed, international players like Revolut, Earthport, Railsbank, Revel Systems and others have chosen Lithuania for both its Fintech-friendly regulation and the availability of tech talent.
“It took a perfect storm for Lithuania to grow as a Fintech hub. We have a talent pool of people with both IT and Finance knowledge, a competency developed in the Centres of Excellence established in Lithuania by global players. There are 40,000 IT specialists in Lithuania and with initiatives like the Startup visa and EU Blue Card we are attracting even more young professionals from abroad. In the future we expect nothing but further growth in the Fintech sector,”
states Vilius Šapoka.
According to a study by Invest Lithuania and Rockit Vilnius, the number of companies operating in the sector grew by a staggering 24% in 2019. And with 113 licensed Fintech companies (i.e. those operating under an Electronic Money, Payment Institution, Specialised Banking or P2P Lending license), Lithuania is the second-largest hub in Europe, the UK being the first. Due to the ability to passport their licenses across the EU, Fintech companies coming to Lithuania can provide their services to a market of more than 450 million consumers.
And it is not just foreign companies that shape Lithuania’s Fintech scene. Local upstarts include P2P lending platforms like FinBee and NEO Finance, digital payments facilitators like Paysera, and Ondato – a KYC platform awarded Fintech of The Year award by the German-Baltic Chamber of Commerce in 2019.
“What we saw happen in the last couple of years is spectacular,”
says Mr. Liudas Kanapienis, CEO at Ondato and former CEO of Paysera UK, one of the first Lithuanian Fintech companies to go abroad.
“And the adoption rate of mobile payments, P2P lending and other facets of Fintech is incredibly high across the country – both in the consumer and business spaces. So, the plan to disrupt the market has definitely panned out.”
Photonics – the country’s calling card in the realm of science
When it comes to presenting Lithuania abroad, the word laser comes second only to Žalgiris, the country’s basketball champions. The reason for this is simple, as the Lithuanian Photonics industry has a 50% share of the ultra-short impulse market, with 90 out of 100 best universities worldwide using Lithuanian lasers in their research. Notable clients include NASA and CERN research facilities as well as such global technology leaders as IBM and Toyota. The first laser was constructed in Lithuania in 1966, and it took time, effort and talent to drive the country to a leading position in this market.
The latest milestone achieved jointly by two Lithuanian pioneers in Photonics – Ekspla and Light Conversion – is the single-cycle femtosecond high-intensity SYLOS laser system, launched in 2019. To date, this is one of the most powerful lasers in the world, its peak capacity exceeding that of a nuclear power plant by several orders of magnitude. Dubbed the “biggest laser among the fastest and the fastest laser among the biggest” during the launch event in Szegen, Hungary, SYLOS could help researchers solve the issues of nuclear waste disposal.
Life Sciences – treating diseases one gene edit at a time
Ever since Lithuania regained its independence 30 years ago, Life Sciences has become one of the fastest-growing industries in the country. The sector is currently growing by an impressive 20% per year, and it already makes up more than 1% of Lithuania’s GDP, which is six times the EU average. Today, there are more than 130 Life Sciences enterprises operating in Lithuania, with household names like Teva, Thermo Fisher and Hollister, to name a few.
Speaking of household names, CRISPR – a frequent star of science news – has its roots in Lithuania as well. Independently discovered by the team of Vilnius University professor Virginijus Šikšnys (who, together with Emmanuelle Charpentier and Jennifer Doudna received the prestigious Kavli Award for it), this enzyme-powered gene-editing technology is used to develop cancer medicine and cultivate drought-resistant crops. It also holds the potential to cure life-threatening hereditary diseases.
Indeed, Lithuania has brought its science game to the next level in the last 30 years. According to the Global Competitiveness Report, the country leads in the CEE region when it comes to business-university R&D collaboration. And with around a quarter of all students enrolled in STEM study programmes, Lithuania has a steady pipeline of new talents. Lastly, diversity is not just a buzzword in the country’s science field, as 57% of all engineers and scientists are women – the largest share in the EU.
Featured image credit: Unsplash
