Despite the splendor of its neoclassical premises that housed the first bank in Vilnius, the Bank of Lithuania has all the attractions of a modern regulator. Under the moldings of the ceiling of his office, Marius Jurgilas, the member of the board of the Bank of Lithuania in charge of fintechs, makes sure to leave visitors a Wifi code. At the exit they can complete a satisfaction questionnaire. "We provide a service, we need to improve the customer experience"he says without complex.
At the time of Brexit, the Baltic country wants to become the gateway to Europe for financial start-ups targeting the single market. "Originally we wanted to increase competition in Lithuania, where foreign banks dominate", details Marius Jurgilas. Coming from a country where the financial center is very modest, the Lithuanian initiative initially gave rise to indifference but it begins to be seriously noticed. In late December, two heavyweights of the new finance – the British Revolut and the American Google Pay – decided to establish their base camp on the old continent to get a "passport" European.
Revolut and Google Pay
In the snowy streets of the old "Northern Jerusalem", this renewed attractiveness is not obvious. It must be said that if Revolut plans to open offices for «About thirty people»For the moment, fintech has only four employees in Vilnius, three of whom work with London. On the edge of the historic center, where the Soviet architecture mingles with the older facades, the large futuristic buildings of the Nordic banks still dominate the horizon. The circular tower of Barclays also stands out. It houses – for a few more months – 1,400 employees responsible for providing support services for the Group's retail banks in Europe.
Banking on low wages and the quality of its education, Lithuania has developed a whole ecosystem of outsourcing of financial services – Western Union has nearly 2,000 employees – but now wants to go upmarket. "The country has know-how in electronics, medical laser, cybersecurity and seeks to mobilize them to create added value and create opportunities. 400,000 people (out of a population of about 3 million inhabitants) left after the crisis of 2008 and to date 30% of the working population lives abroad », recalls Luc Boyer, economic adviser at the French Embassy in Lithuania.
The ambition is broader than the only precise finance Vilius Sapoka, the Lithuanian Finance Minister: "We want to strengthen our foundations in high tech, be it in fintech, biotech, 'greentech', 'blockchain' or robotics. " But it must be said that in terms of financial technologies, the Brexit offers an unexpected accelerator.
Banking license five times less expensive
In 2019, the Lithuanian government has set itself the goal of attracting at least two Fintech stars. "We have identified 250 priority companies to approach"says Dominykas Stankevicius, senior advisor at Invest Lithuania. With a representative office in London, the body that promotes foreign investment boasts a list of measures that makes the head spin: a favorable tax regime for innovation, a "start-up visa", a process of payment and express electronic money license (in three months and in English), a specific banking license that is five times cheaper (in equity) than standard licenses or access to European payment infrastructures.
In recent years, Lithuania has granted 83 licenses to fintechs. In Europe, only the United Kingdom has done better! This is probably just the beginning. According to the bank of Lithuania, nearly 100 financial companies have applied for a license in the country in recent months and among them, a quarter comes from the United Kingdom. "It's an assault. We do not have all the resources to study applications, we have to choose … "says Marius Jurgilas. The score also begins to worry those who fear the collateral effects of a regulatory "dumping" that would not say its name.
Course of action
"The challenge now is for this small country to be careful to contain the risks. On its own, Revolut has 3.8 million customers. That's more than the 3 million people of Lithuania! The money laundering scandals that have plagued Estonia (Danske Bank) and Latvia (ABLV) will force Lithuania to pay close attention. Everyone is waiting for them at the turnsays Alexandre Pinot, a Frenchman who joined Israeli start-up Simplex in Vilnius. If the supervision rules are the same everywhere in Europe, only the country granting the approval is responsible for their implementation. Gold "Small countries are not always encouraged to deploy the means to monitor those actors who do not prioritize the local market", says a specialist.
In this area, the bank of Lithuania asserts its course of action: no empty shell and supervisory standards in line with the requirements of the ECB. It has also withdrawn their license to two local banks in 2011 and 2013.
Special envoy to Vilnius