Worldwide, the Fintech industry is anticipated to expand sixfold by 2030, reaching $1.5 trillion in revenue and accounting for a quarter of all banking valuations, according to BCG. The competitive pressure is reshaping the sector, pushing traditional banks to innovate and keep up with the trends. From acquiring payments to facilitating cross-border transactions, hundreds of often invisible providers make our financial lives easier and safer.
This is especially true in Europe, where the wide adoption of Open Banking principles means that traditional banks are required to provide APIs to authorized and regulated third parties. While EU-level rules apply to all countries of the bloc, the role of local governments in fostering innovation is paramount. With more than 260 Fintech companies, Lithuania represents Europe’s largest Fintech hub.
Lithuania offers Fintech companies a hard-to-beat combination of a business-friendly regulatory environment with efficient licensing processes and a rich talent pool in software development, AML/Compliance, customer support, and operations. Vilnius’ strategic goal is now to further strengthen its position as a high-value-added hub by promoting the qualitative growth of the sector. This involves opening up to even more companies creating innovative solutions, building the needed skill base, strengthening risk management procedures, and raising awareness.
Recently all of these ambitions have been published with the introduction of the 2023-2028 Fintech Strategy. The document, developed by the Ministry of Finance with the country’s Fintech community, has 5 guiding principles:
- Supporting the qualitative development of the Fintech sector in Lithuania
- Attracting innovative Fintech solutions to Lithuania
- Ensuring that Lithuania is the Centre of Excellence for Fintech
- Ensuring that Lithuania is a safe and reliable jurisdiction
- Ensuring that Lithuania is universally recognized as a European Fintech hub
Each of the principles has a mini-road map with responsible stakeholders, easy-to-track, and ambitious KPIs, like growing the number of clients served by locally-based Fintechs from 25 to 35 million. It embodies the good practices of co-creation and the cooperation between public and private sectors that have been crucial to the sector’s success so far.
The strategy builds upon years of development, growth, and experimentation, with over 7,000 specialists and more than 260 companies. The strategy also incorporates all the steps already taken by the sector to increase its resilience and attractiveness, including the Bank of Lithuania’s Newcomer Programme, the first AML/CTF specialist certification program in the Baltics, and the official application to host the Anti-Money Laundering Agency in Lithuania.
Further development will have a positive impact on the conditions enjoyed by Global Business Services centers operating in Lithuania. Next year, Vilnius will become home to Europe’s largest tech campus, worth €100 million. Upon completion in late 2024, Tech Zity is set to house 5,000 digital ecosystem workers, many of whom undoubtedly will be working in Fintech.