How Lithuania’s Fintech Industry Resists Worldwide Economic Decline
According to Invest Lithuania’s 2022–23 report, the revenue from all licenced Lithuanian fintech companies engaged in banking increased by 80% between the first half (H1) of 2021 and 2022, reaching €375 million. This was a 26-fold rise over H1 2018, with revenue gains of over 100% reported by the top ten fastest-growing fintech companies. Thus, the updated assessment of the performance of the fintech industry in Lithuania in 2022 shows that it is still thriving despite a decline in international investment.
In this article, we provide reliable information on how the fintech sector in Lithuania is commendably coping with the decline in investment in the global market. We also list the top fintech startups and financial services companies operating in Lithuania.
Factors Behind Lithuania’s Emergence as the EU’s “Hottest” Fintech Hub
In an address on the economic resilience of the international fintech sector, Invest Lithuania's General Manager said that Lithuania's fintech sector remained strong, while global fintech investment decreased by about a third in 2022. Brexit was one factor behind Lithuania’s success in the fintech sector. In addition to it, there were other notable contributors within the Baltic nation.
During an online discussion with Sifted, Dimitri Gugunava (former Vice President of Banking and Acquiring at SumUp), Marius Jurgilas (former Board member of the Bank of Lithuania), and Nathalie Oestmann (former Chief Operating Officer at Curve) shared their expert opinions on this topic. We now present their views and those from other credible sources below:
The Brexit opportunity
There were 55 fintech businesses in Lithuania in 2014, but in 2020, the number rose to 230 registered and authorised fintechs. Thus, in just six years, the Lithuanian fintech industry grew by around 320%. Some financial experts see Brexit as the factor behind this significant development. They are of the opinion that while Brexit shocked the European Union (EU), it also presented industrial growth opportunities for several of the bloc’s members, including Lithuania. Hence, while Amsterdam, Frankfurt, and Paris competed to entice financial companies away from London (United Kingdom), Vilnius (Lithuania) made a push for the world's fintechs.
“Lithuania ended up in the right place at the right time. It will be hard for others to follow. Lithuania is ahead now in building a self-reinforcing ecosystem of attracting more fintech — which attracts more talent, which attracts more fintech investors. It will be hard, just by copying the model, to achieve the same results.” — Dimitri Gugunava, SumUp.
The role of the Bank of Lithuania (Central Bank of Lithuania)
Lithuania established an infrastructure that made it more appealing to fintechs so that it could take advantage of the post-Brexit opportunity. The Bank of Lithuania identified potential barriers to the establishment of fintech companies in the nation and swiftly developed a solution to address them. For example, the central bank recognised that it was difficult for non-banks to access the financial system without a partner. As a result, it established CENTROlink, a payment system that enables customers of banks, fintech companies, and other financial institutions in Lithuania to have direct access to the SEPA network.
“We identified very early on the inability for non-banks to plug into the financial system without actually finding a partner. We created CENTROlink, a payment system, which unblocked this. We put ourselves in a grey zone — such a solution wasn’t embraced by other central national banks. I would say that was a defining moment for us.” — Marius Jurgilas, Bank of Lithuania.
“You can get access to qualified legal companies so that you have the right expertise. We also had multiple meetings with the Bank of Lithuania. It gives you the feeling of transparency, and a good sense of how the progress is moving.” — Dimitri Gugunava, SumUp.
Easy and fast application for an EMI licence
Fintech scaleups and startups require an EMI licence in order to begin issuing electronic money, even though some still need to partner with banks. Yet obtaining one is generally a lengthy and annoyingly paper-intensive procedure. However, Lithuania makes it simpler by allowing businesses to apply through a simplified process. But because the procedure might take between three and six months at best, it is advisable to arrive prepared with all the necessary papers.
“Applying for the EMI license is incredibly involved. Have your documentation ready — it has to be very thorough and the requirements are pretty strict. So make sure you are putting the time aside to respond to everything that you need to in order to apply.” — Nathalie Oestmann, Curve.
Lithuania’s multicultural talents and diverse young specialists
Lithuania's labour pool is one of the main factors attracting fintech companies from around the world to the Baltic country. Vilnius is a thriving, forward-thinking city that bases the success of its fintech industry on its developed digital infrastructure and talent pool of highly educated individuals. Lithuania ranks fourth in the EU for young professionals (aged 18 to 34) entering the ICT sector. This Baltic nation has a broad and diversified pool of talent, with a sizable proportion of women in executive positions.
The talents in Lithuania are also proficient in the use of international languages. About 85% of them speak English quite well. Although many Lithuanian fintech companies work with international employees remotely, the nation has also had some success luring foreign professionals. According to Eurostat, between 2016 and 2020, the proportion of residents who were born abroad rose gradually, whereas emigration decreased by half. For the first time ever, in 2019 and 2020, immigration exceeded emigration. It was a good start for a nation that has frequently been criticised for experiencing a demographic exodus, especially in the years after its accession to the single market post-declaration of independence from the Soviet Union in 1990.
Introduction of numerous initiatives to attract foreign experts
According to Invest Lithuania, state-funded retraining programmes are assisting in the upskilling of the Lithuanian sector. In contrast to the Ministry of Economy and Innovation's target of 19,000 requalified specialists in high-demand positions by 2026, about 2,500 professionals get private retraining and upskilling each year.
Furthermore, the Lithuanian government has also set aside €80 million for a comprehensive, three-year national upskilling and reskilling plan, which will aid in the development of in-demand skills such as those relating to information technology and fintech.
Streamlined regulations and sanctions
In Lithuania, fintech transactions now make up a growing share of the banking industry. Revolut, a rapidly expanding UK company that began its operations in Lithuania on a payments licence and became the third-largest bank in the Baltic nation in 2022, led the central bank to classify it as a systemically significant organisation. In addition to managing a reputable facility where fintechs can test their ideas under regulatory oversight, the Bank of Lithuania is known for its speed and openness in the licensing procedure.
However, when it became clear that a Lithuanian startup, Finolita Unio, had been used to syphon out more than €100 million ($107 million) from Wirecard AG only weeks before the payment company failed, there was a push to clamp down on the fintech payment sector in 2021. Less than a month after the facts became widely known, the central bank suspended Finolita's licence. As a result of fresh evidence of the failure of the German payment processor Wirecard, Lithuania is under greater scrutiny over whether its anti-money laundering (AML) regulations are too loose.
After such an aggressive venture into next-generation financial services exposed the Baltic country to exorbitant risk, Lithuania is tightening the screws on fintech with strengthened supervision and more resources.
Top 15 Fintech Companies Registered in Lithuania
Vilnius is already one of the most significant fintech centres in Europe, according to a member of the Bank of Lithuania's board. The government, banking industry, fintech companies, and facilitators of the startup ecosystem all share a goal: to foster continuous growth. The broad spectrum of fintechs that have lately joined the Lithuanian ecosystem is due to Lithuania's attractiveness to local and international investors.
According to the 2022–23 report of Invest Lithuania, as of the end of 2022, a total of 263 fintech companies were confirmed to be operating in Lithuania. They had 7,000 employees, which shows a 19% growth from 2021. We offer our list of some notable companies among them below.
Revolut is Europe’s financial super app for everything money, which includes cross-border transfers, payment links, open banking, card issuing, budgeting control, crypto trading, stock investments, and savings. Read our Revolut overview or visit its website for more information about using it in the EU and other parts of the world.
Bankera is a global payment service for individuals and businesses to have and manage their IBAN accounts, physical and virtual Visa debit cards, and international transactions. It is a digital bank for the blockchain era. Get the full information about Bankera from its website.
TransferGo offers fast and low-cost money transfers to more than 150 countries. It is suitable for freelancers, digital nomads, remitters, and small businesses. This fintech company also has a referral programme for users to earn €22 when they invite their friends to start using its service. For more information, read our TransferGo overview or go to its site.
Walletto is an electronic money institution (EMI) that lets you pay and receive money anytime, anywhere, in an easy and secure way. It provides web- and app-based services for its customers to manage their payments while also allowing businesses to issue their own customised cards. Find out what else there is to know about Walletto here.
Whenever you imagine a super wallet, remember that Curve is available for you. Curve is an innovative digital wallet for holding all your payment cards in one place. It supports fiat money cards and crypto cards. What’s more, Curve holds both credit and prepaid cards from various issuers. Amazingly, it is not a bank. Find out more about it in this overview, or check out its website now.
Nuvei is a service that helps merchants accept different types of payments for accelerated business growth. It provides a single API integration and simplifies global pay-ins and payouts, which come in addition to actionable and transparent reporting. Learn more about Nuvei here.
Paysera is a payment system for fast and convenient international transactions. It helps private and business account holders achieve their local and international money transfer goals. The offerings of this fintech company include a contactless Visa card, a mobile app, favourable rates for currency exchange, and an efficient delivery service. Go to Paysera for details or read this overview.
VIALET is an electronic money institution that provides free payment solutions and business accounts for European e-commerce startups and scaleups. Its services range from mass payouts to virtual business cards. VIALET is a safe, secure, and feature-rich service. You can learn more about it here.
Many internet-based companies rely on ConnectPay for the all-in-one platform that they need to manage their financial operations with embedded compliance. ConnectPay enables businesses to accept payments, issue corporate cards, enjoy the benefits of BaaS, and do a lot more things which you can learn about on its site.
Consumers looking for cards for a better shopping experience can go to Zen because it offers some of the best in the industry. It offers an all-in-one mobile app with a multi-currency account for managing your daily finances, exchanging money, and making secure online purchases. There’s a lot more to learn about Zen.
Genome, or Genome.eu as it is sometimes called, is a safe and secure electronic wallet for business banking and personal finance. It offers multi-currency accounts and provides support for batch payments. Read our Genome overview to learn more about it. Alternatively, you can visit its online platform to see all it has to offer.
Pervesk is an EMI that combines traditional financial services with modern technological solutions so that private and business consumers can enjoy reliable, fast, and secure payments. More information about this company is available here.
Satchel provides a variety of solutions for consumers in a range of industries, supporting personal finance management, small business enterprise operations, and card payments at e-commerce stores. Go to Satchel for more details.
Valyuz is an innovative payment service provider. The company enables consumers to make international wire transfers via SEPA and SWIFT, order and make payments with Mastercard debit cards, as well as create and use their own IBANs. More information can be found on its website.
From managing recurring payments to enabling your customers to “buy now, pay later,” as well as bypassing many fee-charging parties in the EU for the sake of cost reduction, consumers can count on Neopay. An account with this EMI gives access to iGaming solutions, POS lending, and other localised payment infrastructure for online and offline businesses in the EU.
The best country for launching and growing a fintech business is the United States of America. It provides a conducive economic, legal, social, and technological environment for financial technology companies to succeed. In everything fintech, the United States is followed by the United Kingdom, Lithuania, Hong Kong, Luxembourg, Switzerland, Singapore, and the United Arab Emirates.
Fintech companies, investors, and talents have a strong preference for Lithuania for many reasons, ranging from its provision of direct access to the SEPA network to a speedy and simplified licensing process. Other contributing factors include incentives for newcomers, access to a multicultural workforce that is highly skilled, and lower initial capital requirements for registering a neobank or an EMI.
As of the end of 2022, Lithuania had 263 registered fintech companies and more than ten licenced commercial banks.
Some of the notable fintech companies are Revolut, Bankera, TransferGo, Curve, Nuvei, Paysera, VIALET, ConnectPay, Walletto, Zen, Genome, Pervesk, Satchel, Valyuz, and Neopay.
Concerning the commercial banks, they comprise local subsidiaries and those of major financial institutions in other countries. Examples are AB Fjord Bank (Lithuanian), UAB Finora Bank (Estonian), European Merchant Bank (Lithuanian), and AB Swedbank (Swedish).
The biggest industry in Lithuania is petroleum refining. Other major contributors to its gross domestic product (GDP) and exports over the years have been chemical production, food processing, energy supplies, and financial services.
Revolut is headquartered in London, United Kingdom. However, it has a banking licence with registration and incorporation from the Bank of Lithuania, which allows it to operate as a bank and electronic money institution in the European Union.
Despite a decline in worldwide investment, Lithuania's fintech industry is nevertheless strong. It is in good shape, has solid fundamentals, and is well-positioned for future growth and development. Moreover, the Bank of Lithuania is working very hard to ensure that the Baltic country continues to be a respected leader in the fintech industry. Also, the government is investing in initiatives that attract and develop highly skilled workers to keep the economy booming. With the likes of Revolut, Bankera, TransferGo, Paysera, ConnectPay, and Curve in this strongly regulated market, consumers can look forward to more innovative solutions for safe and secure banking, investing, payment processing, card issuing, and international money transfers.