European FinTech Innovation and Opportunities

2018 was the year when BigTech companies like Google, Apple and Amazon made deep inroads into traditional banking domains. Additionally, a lot of newer FinTech start-up companies also joined the fray and expanded heavily across Europe, Asia, Africa and North America.  It was also the year when blockchain tech began to be adopted by mainstream companies who realised its potential outside of its previous exclusive use in cryptocurrencies.

All in all, it was a great year for financial innovation and 2019 has more of the same in store. Asia has been leading the charge in terms of financial innovation, but countries like Lithuania now seem to be stealing the limelight. By having the right regulatory framework in place, and by leveraging the European principles of a Digital Single Market, it seems that the Bank of Lithuania has manged to position the country as a hub for financial innovation.

In this article we look at just a few of the many opportunities in the financial services space and how Lithuania has positioned itself to leverage them.

Crowdfunding and Peer to Peer Lending

Crowdfunding and P2P lending is really pushing the boundaries of what non-banks are capable of achieving. They make it possible for retail customers to step into the shoes of bankers and participate in the credit economy that is crucial to economic growth and personal prosperity in the modern era.

The Bank of Lithuania makes is easier for crowdfunding and peer to peer lending platforms to set up shop in the EU. The Bank provides consultation on regulatory issues and assists with licensing.  What’s great is that all of this is done in a very cost-efficient manner and the regulatory fee is kept to a bare minimum to ensure that new players do not have to fight against unnecessary entry barriers.

Blockchain Enabled Financial Services

Lithuania actually punches way above its weight when it comes to blockchain based innovation. The country attracted the most ICO (Initial Coin Offering) investments after the US and China. They also released detailed guidelines covering taxation, accounting, regulation and most importantly – Anti-money laundering and counter terror financing for ICOs.

This paves the way for blockchain to be used in things like trade guarantees, low-cost international payments, and even vanilla lending and borrowing. Blockchain is a bed-rock technology that really provides limitless applications.


The first and obvious target for FinTech as well BigTech companies is usually the payments services. The reason for this is much easier regulatory requirements compared to offering other services like lending, securities or deposits.

Lithuania offers a great payments platform called CENTROlink which allows companies to join the SEPA payments system and offer services.

For SEPA’s instant payments facility, the use of HSM’s (Hardware Security Modules) becomes necessary in order to ensure the speed of the transaction.

This means that not only digital service providers become part of the ecosystem, but hardware vendors are involved in the innovation as well.


Know Your Customer checks, sanctions compliance, anti-money laundering checks, capital requirements etc. are just a few components of the overall regulatory burden of financial institutions. Reducing this burden without compromising on the quality of the checks is what RegTech is all about. Bank of Lithuania offers things like remote KYC and identification and an e-licensing tool to make this burden easier. Additionally, by providing licensing consultation and a one-stop shop for regulatory and even business consultation, they are really increasing the attractiveness of their market for new entrants.

Read more articles about the Bank of Lithuania and their PSD2-based ecosystem for FinTechs.

About the author

Ulrich Scholten is an internationally active entrepreneur and scientist. He holds a PhD in information technology and owns several patents on cloud-based sensors. His research on cloud computing is regularly published in highly rated journals and conference papers. From 2008 - 2015, he was associated research scientist at the Karlsruhe Service Research Institute (KSRI), a partnership by KIT and IBM, where he researched network effects around web-platforms together with SAP Research.

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