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Lithuania – post BREXIT hub for UK financial services providers and Fintech companies

Lithuania – post BREXIT hub for UK financial services providers and Fintech companies

20/07/2018

Financial Times reports, that the French central bank has turned up the pressure on hundreds of British payment providers and digital finance companies that have customers in France by asking them for details of their Brexit contingency plans. As it is stated in the article, the move – the first time such a request has been made by an EU national regulator – is being seen by British payments companies as the latest salvo by Paris in its campaign to challenge London as the European capital of the fast-growing financial technology sector. Brexit impact will increase diversification in FinTech in Europe as more areas become digital finance hubs. While Paris is lobbying particularly hard, another EU member state Lithuania, has already earned global fame for being a friendly destination to establish a pan-European FinTech business.

Lithuania became traditional jurisdiction for international FinTech’s providing services in continental Europe

Big multinationals as Barclays, Western Union, Nasdaq, deVere, new stars as Singapore-headquartered InstaRem and UK-based Revolut and lot of FinTech start-ups from around the world already established their presence in Lithuania.

As it is stated by Financial Times, there are 5.500 financial services companies that “passport” their licenese out of the UK across the other 27 EU countries, of which a sizeable chunk are payment providers. UK companies that provide financial services to customers elsewhere in the EU will lose their “passporting” right to do so after BREXIT in March 2019 unless an agreement is reached to extend market access, at least for a “transition” period. Many of them plan to set up a separate EU subsidiary to avoid being barred from those markets and many FinTech companies are already knocking on Lithuania’s door include big names like UK banking hooligan Revolut, which is currently applying for Lithuanian Specialised Bank license. It has praised the country as “one of the most exciting FinTech hubs in Europe right now”.

Business oriented regulation and fast licensing process 

“Brexit is a big opportunity and there is no doubt that Lithuania is a very competitive country – 35 new FinTech businesses were registered in 2017 and we feel that the interest is still growing. This number shows that participants of this sector willingly choose Lithuania as their home. A great number of requests from all around the world for us show a great interest in Lithuania as FinTech jurisdiction”, – says Inga Karulaitytė, attorney at law at ECOVIS ProventusLaw, a law firm is specialising in financial law and financial services licensing.

Lithuania has developed a legitimate and a very firm base for the sector of financial technologies. A developed sector of information technologies, positive attitude of the Bank of Lithuania (Central Bank and  regulator) and the public sector towards new technology-based business, cooperation between state authorities and businesses, talented people, favourable geographical location, active FinTech community comparatively quick and cheap licencing of financial service providers – all these factors encourage financial technologies companies to choose Lithuania. The Bank of Lithuania reviews applications and issues a license for Payment or E-money institutions within the period of 3 months or even faster without establishing a company after submitting the application. The regulator follows the one-stop-shop principle when meeting and consulting potential financial market players. Prior to setting up a company or launching a financial product, investors can check whether their plans are in line with the applicable regulatory requirements.

Remote client identification, individual client IBAN accounts and direct access to SEPA for non-banks

Lithuanian licenses FinTech companies have an access to the payment infrastructure of the Bank of Lithuania avoiding intermediary commercial banks. Lithuania also launched a payment system CENTROlink, opening up the possibility for financial institutions to offer their clients the most cutting-edge innovation in the field of payments – instant payments, available 24/7/365, including weekends and holidays. Lithuanian regulator allows non-banks open IBAN format client accounts and grants direct access to SEPA through its CENTROlink system. Remote client identification allows on-board international client via internet without physical presence at the branch.

Unique Specialised Bank license opening single European banking market

The unique Lithuanian Specialised Bank license allows provide almost all traditional banking services in single EU banking market of 500 million consumers. Having only EUR 1 000 000 equity capital requirement Specialised Bank is considered as the only deposit taking “light” banking license in EU/EEA jurisdiction. Lithuanian licensed bank opens up large and wealthy European banking market at significantly low cost allowing new international players and FinTech start-ups enter the European market at significantly low cost challenging traditional European banks in their large home markets.

ECOVIS – the most experience financial licensing advisor

ECOVIS International is a leading global consulting firm having more than 7000 professionals in over 70 countries worldwide. ECOVIS ProventusLaw is a Lithuanian member firm of ECOVIS International. ECOVIS experience in licensing of finance institutions starts since the incorporation of first modern NSEL 30 Index fund in Lithuania and fund’s management company 15 year ago. Recently ECOVIS licensed European branch of California based e-payment company Alternative Payments, servicing over 100 000 websites around the world, global financial advisor deVere Group getting e-money license, advised Singapore-based InstaReM, operating in more than 50 countries by getting the e-money institution license for their European business. ECOVIS ProventusLaw is the founder of Lithuanian FinTech association FINTECH HUB LT. More about ECOVIS experience at https://ecovis.lt/fintech/why-lithuania/

More about financial licensing opportunities at www.ecovis.lt/fintech

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