This month has seen UK prime minister Boris Johnson meet with Lithuania’s Ingrida Šimonytė and stated his eagerness for the countries to work together more closely and “further strengthen trade ties” in sectors including fintech, Airidas Puodziunas, General Manager at Contis Lithuania writes.
Lithuania’s growing position as a fintech hub is no accident: it is the result of deliberate policy. The country’s business-enabling regulation, and an innovation-friendly microenvironment – exemplified by the Bank of Lithuania’s regulatory sandbox – have all been instrumental to the fintech sector’s impressive growth in the past few years. The result? More than 230 fintechs have set up shop in Lithuania.
The UK scene appears similarly booming. New figures out this month show UK tech represented more than a quarter of London’s new stock exchange listing in 2021. Figures from the UK Treasury show the country’s tech sector raised double that of its German counterpart and three times more than France.
One thing that is clear from government announcements, is that Lithuania is positioning itself as a hub for AML and CFT as a way to maintain robust and sustainable growth. This acknowledges that compliance structures can attract those larger fintechs that receive more regulatory scrutiny.
Meanwhile, in the UK, rumours have been swirling that Chancellor Rishi Sunak is in talks to relax financial regulations, with the possibility some EU rules will be tossed out, as a means of renewing the City of London’s reputation as a global finance hub.
Tight regulation need not be a bad thing, as long as it is done in a way that reflects the specifics of the sector. In effect, Lithuania is creating a new type of sandbox. Not one where products are safely tested against regulation, but one where regulation itself is tested against the needs of a thriving market.
It will be fascinating to see how these dual stories play out in the coming months.