What awaits Lithuania's Fintech sector?

The Lithuanian Fintech sector has come a long way since it took its first decisive steps into becoming a globally renowned hub around the time of Brexit in 2016. Companies needed a jurisdiction to keep serving companies in the European Union, and Lithuania took this opportunity seriously. After all, every crisis, even a rupture of long-standing economic relations, is an opportunity. 

Today, fuelled by a number of successful initiatives, the Lithuanian Fintech ecosystem encompasses 282 companies that collectively serve over 30 million customers across the EU. It is true that in the last decade, the initiatives and ethos that powered its growth have altered in scope and focus, but one thing has remained the same. It is the hub itself, a network of innovators, entrepreneurs, and industry leaders that give Lithuania's Fintech sector its unique spirit and identity. The question is – where do we go from here? 

In 2016, the Lithuanian government set itself a bold target, to become the EU's number one destination for Fintech. To do this, support was galvanised across institutions, with the Bank of Lithuania leading the charge. With fast tracked licensing in place, as well as a regulator who was supportive and sympathetic to industry needs, the sector was able to scale up to 170 companies within two years. And it has been growing consistently since then, boasting a 60% increase in size in the last 6 years. But this growth has not happened without friction or change. 

One of the main drivers of the sector's initial growth spurt was the access it gave companies to top-tier talent in a cost-competitive manner. Lithuania has been able to supply a steady number of young professionals that come ably qualified to meet market needs. For instance, Lithuania leads globally when it comes to digital skills according to The IMD World Digital Competitiveness Ranking 2024, while 57% of 25-34 year olds have higher education.  

The picture painted by a newly published survey conducted on the Fintech sector by Invest Lithuania, the local foreign investment agency, is indeed one of a hub that has reached a matured state. Its findings show that the sector's reach is now truly global. 46% of all companies surveyed have their headquarters abroad. The UK accounts for the largest share of foreign Fintech companies in Lithuania, followed by the US, Estonia and France. Not only that, 57% now employ international staff in their Lithuanian offices. 

Furthermore, the scope of services provided is equally diverse. Although companies providing Payment Services remain the most prominent vertical, accounting for a third of all companies, the sector also encompasses Blockchain & Cryptocurrency, Financial Software, Lending, Digital Banking, Savings and Investments, Compliance Management & Cybersecurity, Big Data & Analytics, and Insurtech. Regarding the Payment vertical, its reach continues to grow, with over 30 million EU customers now served by Lithuanian-licensed Fintech companies. Of course, this fintech landscape is likely to change, with MiCA regulation coming into force, there may be some contraction in the crypto-currency field. 

Another sign of the hub's maturity and health is the fact that the companies within it remain largely self-sufficient, as reported in the latest Invest Lithuania report on the sector. Revenue is the model by which the majority of Lithuanian Fintech companies support themselves, with 70% of companies reporting that they anticipated revenue growth in the coming year, with many reporting that they were anticipating double digit growth. This, in spite of market turbulence, geopolitical tensions and a decline in VC funding. Another clear illustration of the health of the local ecosystem is 88% of those surveyed said they planned to add additional headcount in 2025. 

Much of what comprised Lithuania's initial Fintech strategy may have passed into the rearview mirror, which is a natural byproduct of growth of maturation. What has remained, however, is an ecosystem that is self-sustaining, experienced and knowledgeable, with untapped potential still to be unlocked. What made the sector so unique was always its supportive and dynamic community.  

These days, Lithuania, like many European countries, has strengthened its regulatory framework. However, the benefits of being the largest Fintech hub in Europe by the number of licensed Fintech companies may yet be felt. With more licensed Fintech companies than the Netherlands, Ireland, Germany, France or any other European country, the M&A potential for the local sector is substantial. It is in this field that much future potential may lie.