Booming: Lithuania’s Fintech Report and Startup Map 2021by Fintechnews Baltic February 25, 2021
Despite headwinds caused by the COVID-19 pandemic, Lithuania’s fintech landscape continued to grow in 2020 with 40 new companies setting up operations, bringing the total number of fintechs in the country to 230, according to Lithuanian investment promotion agency Invest Lithuania.
Almost half of these newcomers were international fintech brands opening offices in Lithuania, showcasing the Baltic state’s rising position as the gateway to the European Union (EU) for fintech companies.
Lithuania has worked to becoming the preferred location for overseas fintech startups looking to expand into the EU, promising a faster licensing process, fintech-friendly regulators, good local talent, and perks such as remote know your customer (KYC) procedures and a sandbox regime for startups in their first year.
It prides itself for being the largest fintech hub in the EU in terms of licenses companies, with its central bank having so far issued 118 passportable fintech licenses – the highest number in the EU.
Lithuania’s position as the gateway to the EU was re-enforced with the UK’s exit from the bloc. Since Brexit, several prominent London fintechs have relocated or created new headquarters on the continent, including Revolut, Curve, Square and most recently open banking startup Yapily.
Out of the 230 fintech companies based in Lithuania, some two dozen have links to Britain.
Digital banking startup Revolut opened its office in Lithuania in 2017 where it now employs more than 200 people across banking, operations, product development, customer support and more. After Brexit, Revolut’s Lithuanian entities became a hub for all of its European operations, said Virgilijus Mirkes, CEO of Revolut Bank.
“70% of our 13 million customers are situated. Therefore, becoming a European bank has always been a priority,” he explained. “We are building a next-generation bank here in Lithuania, and we have every ambition to leverage our SPB (Special Purpose Bank) license to expand operations across Europe which is an essential milestone in Revolut’s goal to build the world’s first truly global financial super app.”
Invest Lithuania estimates that the fintech sector employs more than 4,000 people in the country, an increase of more than 18% from the previous year that was mainly driven by companies scaling their teams to meet increased demand.
This was evidenced by strong revenue growth recorded by most companies. A survey of 86 fintech companies in Lithuania found that 87% of them saw revenue increase in 2020, with about a third registering a surge of over 100%. Fintechs in the segments of compliance, payments and financial software saw the highest revenue growth, the government agency says.
When asked about the domain where Lithuania could become a leader in, respondents cited compliance and regtech (69%) as the top segment, an opinion supported by a range of factors, including the growing number of anti-money laundering (AML) specialists in Lithuania, the increasing number of compliance-related solutions on the market, and the establishment of the AML Centre of Excellence.Subscribe to the most important Fintechnews in Estonia, Lithuania and Latvia.