29 Jul Over 200 fintech companies choose Lithuania as a European base
Paulius Tarbūnas, Head, Fintech Lithuania, describes how firms are drawn in by a broad sectoral ecosystem, great infrastructure, skilled workforce, and progressive regulations and licensing
Could you introduce Fintech Lithuania to our readers and explain how the Lithuanian fintech community has evolved in recent years?
Fintech Lithuania is part of Lithuania’s information and communication technology (ICT) industry association Infobalt. We work independently from Infobalt and within our group we unite not only fintech companies but also what we call fintech ecosystem enablers. We have law firms, IT infrastructure companies, IT development companies, various service providers for fintech companies and, of course, we have fintech companies. The main distinguishing feature of Fintech Lithuania is that we are not only focused on fintech but we reach out to the broader ecosystem.
With regard to the growth of fintech in Lithuania, I think that this goes back to around for or five years ago when the Bank of Lithuania, the Ministry of Finance and some other governmental bodies came up with a plan to focus on this area and make it a true strategic sector for Lithuania. We made it convenient and attractive for foreign companies coming to Lithuania to apply for a license and set up business here. According to a report issued earlier this year, there are currently over 200 fintech companies based in the country. The growth of licenses being issued for fintech players is also impressive: Lithuania was number two in Europe in terms of new licenses issued last year.
How would you assess the magnitude of the COVID-19 pandemic on the Lithuanian economy?
It is a bit too early to tell I would say—everybody agrees that it will have a negative impact, however the magnitude of that impact is yet to be seen. What we have seen among the members of Fintech Lithuania and Infobalt is that some IT and fintech companies have been fairly successful during this period—in regard to increases in sales and efficiency of employees. In our sector, we believe that the negative impact will be slightly smaller than for the overall economy.
The Lithuanian government’s recently launched development plan, the DNA of the Future Economy, is set to further enhance the country’s cultivation of opportunities in emerging sectors. Could you tell us about Lithuania’s successful bet on digitization over the last decade and how that has helped the country navigate the pandemic and opened up new opportunities for the economy?
For the last few decades, Lithuania has been at the forefront of developing IT infrastructure. In terms of internet connection speeds and the availability of wifi, we are among the top countries in the world. I believe that this has helped a lot during the COVID-19 outbreak—the fact that we invested in this infrastructure in the past has born fruit at this time. As for the country’s post-COVID plan and the outlook for the future of the economy, I would like to stress that the DNA of the Future Economy plan was created with the input of the business community. We were heavily involved in discussing and submitting proposals for it. Of course, being the ICT and fintech association, we tried to make sure that further digitization of the economy was included in the plan, as well as the re-skilling of the workforce to prepare it for the digital future. This crisis has shown that a lot of businesses have had to transform rapidly to digital channels and digital services during the pandemic.
What would you say are Lithuania’s competitive advantages as an investment destination and which key elements combine to make Lithuania a unique, safe and lucrative destination?
There are number of reasons why Lithuania is attracting so much attention. First, the Bank of Lithuania is a very progressive regulator, which has built processes and infrastructure to support the ecosystem. These include a newcomers program, a regulatory sandbox, the world’s first blockchain sandbox LBChain and the CENTROlink payment system, which is a gateway to SEPA payments. Secondly, we offer flexible licensing opportunities for fintech companies, with the availability of special purpose bank licenses, and limited licenses for electronic money and payment institutions. Thirdly, there is effective and friendly co-operation between Lithuania’s fintech ecosystem builders, such as its fintech associations, fintech hubs, the regulator and governmental bodies. Fourthly, is the availability of a highly skilled workforce, infrastructure, an abundance of modern co-working centers, relatively low office rent costs for prime locations and so on.
Recently, Lithuania hosted the virtual Fintech Week Lithuania. What were some of the takeaways from this event?
We have fantastic collaboration between government and the private institutions that makeup the Lithuanian fintech ecosystem. We have regular coffee meetings between the fintech associations and hubs, the Agency for Science and Innovation, Invest Lithuania, the Bank of Lithuania, the Ministry of Finance and others, and the idea to organize a virtual Fintech Week Lithuania was born in one of those meetings. The number of registered participants was impressive, with over 2000 people interested in taking part in the virtual event. We also streamed the program through YouTube, Facebook and the event’s own platform, resulting in very significant overall viewership numbers. It was a great opportunity to remind everyone about the opportunities in Lithuania and to have meaningful discussions among the fintech community.
CAST AI, a Florida-based developer of cloud computing solutions, has announced the establishment of a development office in Lithuania. The company, which had already raised $4.8 million by the beginning of 2020, plans to expand its Vilnius-based team to 100 people in the next three years. What should our readers know about the business synergies between the U.S. and Lithuania?
Lithuania is a reassuring opportunity for countries like the U.S. or others to take advantage of the very skilled workforce that we have here. We have many IT developers working at the top level—they may not be the cheapest but you can rest assured that the quality is here.
What would be your key message for the international audience of Newsweek?
I would say that Lithuania believes in fintech. We believe that it is a sector that will grow and has great potential in the future. Lithuania continues to focus on fintech sectors and to build attractive services and infrastructure to attract more fintech companies to choose Lithuania as their base country.