E-licensing is the way to go in Fintech
The Bank of Lithuania is making the life of global fintechs easier by allowing companies to obtain licenses remotely.
Although the world is getting increasingly paperless, some areas are less prone to change, regulation being one of them. Making even small adjustments to the system is hard as so many of the procedures are interconnected. So, how is Lithuania managing to stand out from the crowd, with improvements – like their recent introduction of e-licensing announced every week or so? It all comes down to strong political will and the regulator’s strategy of turning Lithuania into a booming Fintech hub.
Ease of access, user-friendliness, and simple one-click solutions for obtaining permits and licenses: these are some of the key features Fintech companies look for when choosing a location for establishing their presence in the European Economic Area (EEA). And the Bank of Lithuania, already known for its flexible approach to regulation, has recently enabled global fintechs to apply for financial licenses from anywhere in the world via their new e-licencing system.
This move will streamline the process of getting the licenses required to operate across the SEPA zone which unites 512 million potential users and 23 million SMEs in the EU/EEA. In the initial phase, remote applicants can choose an e-money institution licence (EMI), payments institution (PI) licence, or a with specialised banking license (SPB), with more options to be added in the future. One of the world’s highest profile challenger banks, Revolut, recently received both an EMI licence and a SPB licence, allowing it to offer numerous banking services to customers across the EU, including accepting deposits, lending, and a range of payment services.
To operate in the European Union (EU), Fintech companies must obtain a licence issued by any member country. So, a licence issued by the Bank of Lithuania grants access to all the EU. But there is still the question of why fintechs are choosing Lithuania over other member countries? We all know the maxim that time is money, and this case is no exception. The Bank of Lithuania can issue these licences in as little as three months. which is 2-3 times faster than other institutions in the EU. This streamlined approach by the Bank is helping it achieve multiple goals, from establishing a “single window” approach through to diversifying the finance market in the country. With 170 fintechs now based in the country, and the sector growing 45% in 2018, it is certainly succeeding.
Not only does Lithuania have the fastest licensing set up, which is tailored for innovative and transparent financial technology companies, it also has a progressive regulatory system that is driving positive and advantageous changes. Regulators can often impede the progress of smaller innovative service providers through rigid and strict bureaucratic processes. Here, in contrast, the main regulator is actually the initiator of progress and change. And they are constantly striving towards making the business environment more beneficial and easily accessible for Fintech companies from all over the world.