More taxes paid, a smaller number of investments, but larger in volume, tighter regulation, and strong development prospects. Such insights from the financial technology sector were expressed by market participants, who gathered to review the year at the traditional conference Fintech Scene in Lithuania – Wrap Up of the Year 2022. Once again, the importance of development guidelines was stressed, and the promise of state institutions that these guidelines would be presented soon was heard.
According to Lina Žemaitytė-Kirkman, Head of the Financial Technology and Sustainable Innovation Centre Rockit, 2022 was a year of further consolidation and construction of new bridges for the community.
“The fintech community’s roots are extending deeper and deeper into the Lithuanian economy. This is reflected in many indicators, such as average wages and taxes, and the size of investments attracted. Naturally, the community is cementing itself, represents itself more and continues to lead in the European Union and worldwide market. The perspectives look bright − we believe that soon we will hear of significant achievements in terms of investments,” says L. Žemaitytė-Kirkman.
2022: Moving forward in the face of a slowing global economy
Simonas Krėpšta, Member of the Board of the Bank of Lithuania, Vaiva Amulė, Head of Fintech Hub LT, and Jonė Vaitulevičiūtė, Managing Partner of the venture capital fund Firstpick, gave presentations at the conference, summarising the activities of the year. Justinas Lasevičius, COO and co-founder of TransferGo, and Lukas Jakubonis, Head of Financial Market Development at the Bank of Lithuania, joined the discussion on fintech issues and prospects. All the participants of the conference were welcomed by Vaida Markevičienė, Vice-Minister of Finance.
According to data from Vaiva Amulė, Head of Fintech Hub LT, four electronic money institution (EMI) and payment institution (PI) licences were revoked, and four new licences were granted in 2022. One license was granted to a specialised bank. The number of EMIs, PIs, and specialised banks increased from 145 to 146. The total number of companies in the fintech sector is estimated to be close to 300.
According to the Bank of Lithuania, the volume of payments made by EMIs and PIs increased significantly this year, reaching €241 billion in the first half of this year, or almost twice as much as in the same period a year ago.
This year, compared to 2021, although it fell from 12 to three, the amount of investments increased from €59 million last year to €67 million in 2022.
Lithuanian fintech sector employs around 4,000 employees, whose average salary is significantly higher than the Lithuanian average − almost €3,000 before taxes. Over €105 million in social security contributions were paid in 2021 (the data of 91 companies) and this year − already €160 million (data of 78 companies).
The relationship between fintech companies and the market-regulating Bank of Lithuania, as well as stricter assessment, remained relevant. In 2020, fintech companies were fined €811,000, in 2021 − €850,000, and this year − €860,000.
The position of public authorities is expected to be clearer next year
According to the participants of the conference, one of the biggest challenges of next year is the increased cost of money, which can lead to a lack of investment. However, as J. Vaitulevičiūtė pointed out, there is money in the market and funding for the Lithuanian fintech sector seems promising − among the Baltic States, Lithuanian companies make up the largest share of companies looking for investment.
S. Krėpšta, a representative of the Bank of Lithuania, drew the attention of market participants to cyber security and money laundering prevention issues. He mentioned that fintech companies could have new opportunities to develop digital central bank currencies, including the digital Euro. Lithuania foresees concrete plans on this issue − preparatory work is underway and a final decision to start the implementation phase will be taken in autumn 2023.
According to the CEO of Fintech Hub LT, next year, to maintain further growth, maturity, and leadership of the fintech sector, it is necessary to retain focused continuity.
“It is especially important that the market regulator supervises the market in accordance with the law rather than expectations vis-à-vis market participants. Also, state institutions support the development of various business models, and provide opportunities to grow and expand the range of services. Fintech companies must comply with the law. I am delighted that the next few years, thanks to new regulations and initiatives at the European level, will open unique opportunities for fintech companies to develop new products and services,” says V. Amulė.
The participants of the conference also heard the promise of Vaida Markevičienė, Vice-Minister of Finance, that the guidelines for the development of the fintech sector will be presented soon, after extensive research and discussions. “We will provide prospects for the next five years so that the fintech sector can grow qualitatively and create innovations as well as manage all risks,” says V. Markevičienė.