Lithuania — the new home of fintech

The Lithuanian fintech business is booming. In recent years, the country has gone from a handful of companies to hundreds, and with its five-year fintech strategy now in place, it’s looking to support fintechs to generate an average 30% revenue growth by 2028.

So what’s making this basketball-loving Baltic state, bordering Latvia, Belarus, Poland and Russia become the European home of fintech?

The seeds of change

Lithuania began its tech push around seven years ago when its financial market was very concentrated and stable, but lacking invention. To encourage growth and inject innovation, the Lithuanian Central Bank and Ministry of Finance developed a holistic fintech strategy.

Part of this strategy included quick adoption of regulatory changes, allowing those with entrepreneurial ideas to take swift action with fewer roadblocks. It was one of the first countries to grant access to the Single Euro Payments Area (SEPA) scheme as well as the SEPA Instant Credit Transfer, also known as Instant Payments.

They were also the first to introduce national crowdfunding regulations, even ahead of European legislators, meaning many Lithuanian companies were already compliant once the EU caught up.

And seven years down the line, the country’s bet paid off. Lithuania is now home to thousands of tech companies, over 250 of which are fintechs, employing over 7,000 people. In 2022, Lithuanian fintechs attracted almost €68m in investment, with the first half of the year seeing an 80% increase in revenue compared to 2021 for the country’s fintech firms.

A booming fintech industry

But that’s not all. In October 2023 the country announced a fresh five-year fintech plan to encourage further growth and investment in the space. With Brexit encouraging many UK-based fintechs to find a secondary European base to continue to do business in the EU, Lithuania was looking like a very attractive option, and the country has leapt on that.

With the country ideally positioned where East and West meet, the combination of a stable regulatory environment, a high tech adoption and a business-friendly attitude, it’s no wonder big names in fintech — from Revolut to Curve — have made the country their European home.

Alongside this, Lithuanian universities have strong ties to the tech sector, providing ample skill with fresh ideas. Add into the mix skilled Lithuanians returning from working overseas in tech hubs like London and the US, and you’ve got a dynamic talent pool.

This year, the capital Vilnius is opening a €100m tech hub called Tech Zity, dubbed as “Europe’s biggest tech campus”, solidifying it as one of the centres of tech innovation in Europe.

Innovation at the core

In a bid to quickly bring more innovative products to market and meet the five-year targets — 35 million customers across companies licensed in Lithuania and an annual sector turnover growth rate of 30% by 2028 — the Ministry of Finance has implemented a “growth-friendly tax policy”.

These substantial tax incentives, which include direct funding as well as a deduction on research and development costs, are aimed at encouraging disruptor mindsets to innovate and grow within its borders.

Lithuania has also fostered a culture of openness and collaboration between regulators and fintechs. “I must admit,” Ekmel Cilingir, Chairman of the Supervisory Board at the European Merchant Bank said in a recent article, “I had never seen such close cooperation in other countries before. So far, these targeted efforts seem to be working.”

As we head to Rockit, the annual flagship Baltic conference dedicated to fintech innovation, we’re excited to see this collaboration, creation and fintech entrepreneurship first-hand. As a leading broker for fintechs, we’re excited to explore new markets, new ways of working and foster new relationships in the heartland of fintech.