There are already 263 fintech companies, employing more than 7,000 workers in a country of just 2.8 million inhabitants
In October 2022, the British company Revolut left the UK to settle in Lithuania, on the shores of the Baltic Sea. The fintech (financial technology) company permanently moved its activities to the territory of the European Union due to the increasing difficulty of serving the market of the Old Continent as a consequence of Brexit.
“We have always focused on our customers and we understand that no one it doesn't like the unknown,” Revolut spokeswoman Ieva Elvyra Kazakeviciute said shortly before the company's departure to the UK. Along with this there are already 263 companies joining the fintech sector, which employs more than 7,000 workers in a country of only 2.8 million inhabitants.
“We are the first country in Europe to issue licenses for digital banks,” says Diana Girdenyté, director of Investment Projects at state agency Invest Lithuania. As he adds: “This milestone is possible thanks to the fact that the country managed to build the largest hub of fintech companies in the EU member states. Lithuania is also the tenth best country for these companies in the world ranking of countries, compiled by the Global Fintech Index”.
The country's capital, Vilnius, ranks second among medium-sized cities in attracting foreign investment, as reflected in the European Cities of the Future 2022 report. In addition to Brexit, the mass relocation of Belarusian companies – cited mainly for security reasons – from 2020 and Lithuania's strategy to position itself as the gateway to the European market for US-origin startups have given wings to the entire innovation sector.
Since the beginning of this year, the country already has three “unicorns” (companies valued at more than $1 billion). In addition, it has put all its efforts to lead the innovation sector in Europe to become a global benchmark in digital banking.
Lithuania has very flexible legislation, along with an increasingly innovative digital infrastructure – the cost of broadband is one of the most competitive in the world. It also has a reputation for cyber security – the country is currently ranked sixth in the Global Cyber Security Index. These are some of the factors that explain the growth of emerging companies in the financial sector in the Baltic state. In 2016, the country had only 82 fintech-related companies, a number that has tripled in just six years. Of the current 263, around half are local and in 2022 they raised €67.9 million in funding, quadrupling the figures for 2020. The remaining fintech companies are mainly from the United Kingdom (33), the United States ( 16) and Estonia (8). 34% of the total is mainly related to the payments sector.
Over the past five years, and despite the outbreak of the pandemic, the country's innovation has experienced unprecedented growth. “The value of the technology sector has increased 17 times in just three years,” Economy and Innovation Minister Ausrine Armonaite told El Pais. This tiny Baltic republic – which, along with Poland, is the only country in the world to share borders with both Russia and Belarus – already has 1,000 tech startups.
Lithuania wants to introduce itself in Europe as Ireland's alternative for digital platforms. Its advantages are based on much more competitive prices, tax benefits and cheaper labor. The country already ranks eighth in the tax competitiveness ranking within the OECD.