In the current market, there is a great demand for financial licenses. The most important component when it comes to becoming a financial institution is the choice of the country in which to obtain your license.
The whole structure of the future business depends on it: in which country the office will be located, in what language the communications will be carried out with the regulator, and even to which country the IBANs will be offered to the clients, which entails the reputation of the state and helps attract one or other clients.
When choosing the jurisdiction of a future business
It is always appropriate to rely on the geography of the future clientele, which is usually foreseen in the embryonic stage of a financial institution. It is more logical to offer the accounts of those countries where the retail clients are located.
A different situation is when the potential customers market is international, or the objective is to open accounts to legal persons, which entails a series of tangible consequences for the work of the company (which account would you prefer to transfer money to obtain VIP places in a stadium, a Lithuanian or English account, etc.).
Then decisions must be made based on the country’s reputation
The reliability of its financial regulator, the general economic situation of the state, and should take into account known cases of corruption, the simplicity of working with the regulator and obtaining a license. ; and, finally, the number of licenses issued.
Until now, the leadership in relation to these indicators had traditionally been occupied by Western European countries led by the United Kingdom (with a greater number of licenses issued and a liberal regulator) and Ireland (Paypal and IT market leadership).
In part, its popularity with other European countries can also be explained by communication with the regulator in English, both at the time of submitting an application (which often scares the company because of its complexity), as well as subsequent communication. It is necessary to submit 11 annual reports, and this is only as far as reports are concerned.
The Bank of Lithuania
A new regulator, has recently made itself known, providing the society of financial technologies with a simplified and understandable way to obtain licenses in English, promising support for fintech businesses and even an account in the entity.
All licensing procedures have been based on the uses of the United Kingdom. In addition, the bank has created a detailed website in English and has even hired a sales department to promote the new service.
The low cost of local lawyers is several times lower than in Ireland and the South Caucasus in some cases, which, added to the goodwill of the regulator, has led to the immediate creation in Lithuania of numerous financial technology startups at a low cost.
This event coincided with the announcement of Brexit in the United Kingdom and, consequently, with the dark future of British licenses in the EU.