Despite the economic crisis caused by the coronavirus epidemic, fintech companies in Lithuania are planning significantly larger investment this year into legal compliance, monitoring and money laundering prevention tools, data from the association Fintech Hub LT, which unites fintech industry representatives, shows.
“Our members’ indicators show that with a constantly growing number of staff, the most rapid increase has been in legal professionals. We note that usually, in larger companies, at least 20% of staff are responsible for legal compliance and in small companies – even 50%,” says Titas Budrys the chairman of the board at Fintech Hub LT.
According to him, the reason for this is simple – even the smallest legal noncompliance can prove costly for a fintech business, both financially and in terms of reputation.
“Following a breach of the law or other requirements, a fintech business can easily lose its license and its owners – lose the opportunity to develop this type of business in the future,” T. Budrys emphasises.
This year, several association members are planning to double their investment in legal compliance. For example, the fastest growing e-money institution in Lithuania UAB ConnectPay has over the past two years doubled its funding for legal compliance solutions and human resources, while for 2020 it plans to allocate over 0.75 million euro for these purposes.
“We are constantly developing our comprehensive legal monitoring and compliance technical ecosystem, which spans such tools as Comply Advantage, World Check, iOvation Fraud Force opportunities with technological engines created by ourselves. Investment in the growth of a competent digital product and technology team, legal compliance, human resources and the chosen process automation tools comprise the majority of all our investment,” Marius Galdikas, chief technology officer at ConnectPay comments.
Jekaterina Govina, Bank of Lithuania Supervision Service director, states that most fintech companies understand the importance of investment in financial compliance.
“After the wedding, that is to say after receiving a license, and after enjoying a honeymoon, inevitably the time comes to take on household matters – legal compliance questions. While the perception of certain companies of legal compliance is lacking, nevertheless, most understand the importance of investing in this function. We have observed that companies are hiring more legal specialists, more money laundering prevention experts. Such investment in elementary compliance hygiene will, in the long run, pay off and help maintain financial and legal health,” J. Govina says.
“Fintech companies have the opportunity not to halt their investments because unlike other sectors, the global quarantine has less of a negative impact on the fintech community. First of all, this is because the fintech sector was excellently prepared and is already working remotely, of course, with extra security measures in place. Secondly, most fintech services are offered virtually, that is to say – without physical contact with the client, thus in some instances, during a quarantine, such services increase in demand,” T. Budrys says.
The association Fintech Hub LT unites around 40 fintech companies in Lithuania. The association’s mission is to connect fintech market participants in Lithuania, help create favourable conditions for their operations and contribute to Lithuania becoming a centre of gravity for fintech not only in the Baltic States but also all of the European Union.