Fintech Frontiers: Vilnius and the fintech boom in Lithuania

For anyone thinking of starting a fintech business in Vilnius, the city is well positioned to offer networking and support. “Lithuania offers good conditions for starting businesses,” says Bačiulienė. – The government supports startups via investment funds, grants and acceleration programmes. In addition, there are opportunities to participate in competitions, crowdfunding and apply for venture capital funds.”

The city has a fintech co-working hub called Rockit Vilnius which serves as a meeting place for entrepreneurs and innovators. The country’s fintech sector is represented by two different associations – Fintech Hub LT and Fintech Lithuania – and there are plenty of opportunities around Vilnius for people to network and share knowledge. For busy professionals who shuttle in or out of the city, it is possible to get from Vilnius city center to the airport gate in close to 30 minutes.

“Many companies are willing to share their experiences in various events – meetings, hackathons, discussions,” says Bankeras Vytautas Karalevičius. “A significant concentration of VC funds and accelerators makes it easy to start new businesses. Local organizations, such as Infobalt and Fintech Hub, contribute to the expansion of the market, while public institutions, such as the Bank of Lithuania and the Ministry of Finance, are also fintech-friendly. »

Smaller cities face a tougher battle for top talent

Despite the positives, there are still things that Karalevičius would like to see improved for Vilnius to truly solidify its position as a fintech hotspot. “While operating in Vilnius helps us stay in the middle of the high-quality labor market, competition for employees is fierce and the lack of talent is critical,” he says.

“Technology companies and their talent acquisition teams work tirelessly to keep their employees happy and potential employees interested in their companies. The competition for new talent is driving wages to such levels that the city is losing one of its competitive advantages – its affordable workforce. We hope that the government, universities and business come together and do what is possible to increase the supply of skilled workers.

“Additionally, public institutions are often unable to compete with the ever-growing businesses in terms of salary expectations. Consequently, the most talented professionals work in the private sector. Thus, state institutions can only offer limited knowledge and resources when it comes to supporting young fintech companies in the development of their businesses.”

Will fintech inevitably move out of Lithuania?

A common theme running through our Fintech Frontiers series will be whether smaller tech hubs can realistically hold on to their most successful startups. Is it inevitable that when a company scales, it will have ambitions that Vilnius just can’t match?

One such company that moved is Ondato, a KYC compliance provider founded in Vilnius in 2018. Co-founder and CEO, Liudas Kanapienis, explains: “We decided to move our headquarters to the UK for a number of reasons. Firstly, we wanted to draw more attention to the UK market, which, despite Brexit, remains Europe’s financial hub. The move of our headquarters also helped to attract new team members. All this has helped us achieve a higher degree of market penetration. Second, the regulatory environment is favorable for start-ups and VCs. Lithuania lags behind in this perspective; its legislative framework is not as flexible to attract investment from VCs.”

Invest Lithuania tells us that new fintech guidelines are currently being created by both public and private stakeholders to make it easier for fintechs to navigate the regulatory environment. It adds that the Bank of Lithuania regularly facilitates direct consultations, has set up a regulatory sandbox for fintechs, and was responsible for establishing an international AML center that strengthened Lithuania’s fintech economy.

For Bankera, the plan is less about moving and more about expanding, as Karalevičius explains: “Our organization has been running another fintech project in Vilnius for almost a decade, and we do not plan to move anywhere in the foreseeable future. As opposed to moving, we expanded to different countries. We currently have offices or at least a fraction of our workforce not only in Vilnius, but in the second largest Lithuanian city, Kaunas and other countries – Estonia, Spain, Monaco and South Korea.”