April 25, 2019

How Lithuania became a mecca for fintech

For years Lithuania was best known for its world-class basketball team. Lately, the small country of under 3m people is getting noticed for something else – fintech.

Krista Krumina

4 min read

Lithuania old town

In 2017, Lithuania was home to 117 fintech startups. Just a year later — 170. The UK might be often named Europe's capital of fintech, but Lithuania seems to be after that title.

Over the past years, the country has passed several regulations that show its determination to support the development of financial technologies.

For example, while other European countries issue electronic banking licences in approximately 12 months, Lithuania does it in three. What's more, startups can apply remotely. That allows businesses to launch and start operating much faster than in any other country.


Another initiative that Lithuania has adopted is the so-called Sandbox regime. Developed by the Bank of Lithuania, it lets fintech companies test their solutions in a supervised and regulated environment before introducing them to the rest of Europe, and then to the rest of the world.

Finally, for companies looking to expand their business portfolio with deposits and lending, Lithuania also offers a specialised banking licence. The minimal capital is $1m, which is five times less than required by traditional banks.

Dominykas Stankevičius, fintech investment advisor at Invest Lithuania, believes that the country has it all for startups to succeed. He's not just talking about regulations, but also about the available talent pool that Lithuania has to offer.

''We're the first in the EU [when it comes to] higher education," Stankevičius says. And now that more companies come to Lithuania for IT support, the government has spotted the opportunity to attract even more businesses and increased IT study funding by 50%. More talent means more fintech companies considering Lithuania as their homeland.

Altogether, Lithuania's fintech-friendly environment and available IT talent have resulted in growing attention from entrepreneurs from all over the globe. This is, for example, proved by the fact that in 2018, Lithuania received by 41% more startup visa applications than the year before — mostly from fintech startups.

Fun fact: in 2018, Lithuania had nearly twice as many fintech companies per capita as the UK. Now, who's the real captain of this ship, huh?

How did Lithuania get there?

Lithuania becoming the mecca for financial tech was kind of a... coincidence.

It may seem that the country's policies have resulted in an active fintech ecosystem, while it's rather the other way around — Lithuania's fintech-focused policies were the answer to its already active community.

Back in 2017, Lithuania took the blockchain world by storm when startups raised a total of $500m in initial coin offerings, which is where a company sells digital currencies to help fund their operations.

Rumour has it that the same couple of people were behind multiple of these crowdfunding projects, but their success, nevertheless, inspired the nation. The country experienced widespread cryptocurrency adoption, people were actively setting up Bitcoin nodes to verify transactions, and the first crypto-focused coworking space was opened in Vilnius.

The problem, however, was one that every country was facing at the time — policies and regulations had not caught up with the pace of innovation. This opened the door to the risks associated with unregulated financial industries. It was only a matter of time before some of the high-profile Lithuanian ICOs were convicted of fraud.


Cryptocurrency startups were seen as high-risk and accepted with caution, but apart from risks, there was something else — great potential. Besides, the locals had already picked up the trend, so it was really up to the country to decide what to do with that.

Lithuania decided to try and harness the potential of crypto and fintech, but to do it in a more regulated way. The rest, as they say, is history.

Not limited to non-EU startups

Today, Lithuania has been actively promoting itself to non-EU startups as the entry-point to Europe. In the meantime, the country's openness to fintech companies is, naturally, also noticed within the EU.

PocoSys provides white-label banking as a service (BaaS), which means that any business can offer banking services with the help of its solution. The company offers payments, accounts, and cards, thus SEPA (Single Euro Payments Area) payments are an integral part of their core value proposition.

According to Järvan, other central banks don't see SEPA payments as their priority and thus aren't interested in providing them. And if they do provide SEPA payments, the prices offered are much higher.

''In comparison, Lithuanian bank has a very liberal approach to e-money and payment institutions. That's one of the reasons there's a huge boom in companies that are getting their financial licences there,'' Järvan explains.

He's referring to Google, which recently expanded with an e-money licence from Lithuania, but there are more.

UK-based companies are especially active, looking to escape the possible consequences of Brexit. Some examples include Revolut — also named the country's first unicorn due to its Lithuanian origins — as well as Earthport and transferGo.

It seems that when it comes to fintech startups, all roads lead to Lithuania.