Lithuania’s ‘fintech’ drive gets a Brexit boost

By Emma Rumney

LONDON (Reuters) – Lithuania’s drive to become a center for financial technology firms has been given a boost by Brexit and more industry players could set up in the small Baltic nation as it builds a critical mass of expertise, officials and executives told Reuters.

The country has seen a threefold increase in license authorizations for fintech firms headquartered outside of Lithuania since 2015, with several applying after Britain’s June 2016 vote to leave the European Union.

Eighteen have secured licenses this year and 16 applications are currently under review, according to central bank data.

While small, the numbers include one of Britain’s biggest names in fintech, Revolut, and others which also said Brexit was a factor in their decision.

Lithuania launched its campaign to attract fintech firms in early 2016, hoping to improve competition in its banking sector and square up to regional neighbors such as Estonia and Sweden to become a hub for the industry in the Baltics and Scandinavia.

Like many other EU countries, it is now hoping to attract UK-based financial firms worried about losing “passporting” rights to operate across the EU when Britain leaves the bloc.

“We jumped at the opportunity,” said Bank of Lithuania board member Marius Jurgilas. “It is just pure business decisions … They want access to the EU,” he said of the firms whose plans were influenced by Brexit.

Fintech is a priority for the UK government, which it sees it as key to retaining London’s title as a global financial hub.

‘OTHERS WILL FOLLOW’

“What really changed after Brexit is this possibility of losing passporting rights, which is actually quite worrying,” said Revolut CEO and founder Nikolay Storonsky.

Revolut is seeking a banking license in Lithuania rather then Britain, where it is headquartered and has an e-money license.

Three other money transfer or payment firms also told Reuters that EU access was key to their decision: Singapore-headquartered InstaRem and transferGo and Contis, both based and licensed in Britain, with operations in Lithuania.

All either considered applying in Britain or were prompted to seek licenses elsewhere following Brexit vote.

“It all started with Brexit,” said Daumantas Dvilinskas, transferGo’s chief executive.

Firms were attracted to Lithuania above other EU countries by the speed and attitude of regulators.

Specialized banking licenses, introduced in January, take up to six months to secure, while e-money and payment licenses are promised in three. That’s two to three times faster than elsewhere.

The Bank of Lithuania said it had discussed possible license applications with another 100 non-Lithuanian firms this year.

But the success of countries like Britain is not quickly or easily replicated, said Miles Celic, chief executive of TheCityUK, which promotes London as a financial center.

“(It) has developed over many years into an interdependent, interconnected ecosystem,” he said.

Bank of Lithuania’s Jurgilas agreed, but believed the Baltic state’s ambitions were realistic.

“It is a win because they’re attracting brand-name ‘fintech’ and others will follow,” said Revolut’s Storonsky.

Source: Investing.com