SURVIVING THE IMPENDING ECONOMIC WINTER: 5 TIPS FROM LITHUANIA'S LEADING FINTECHS

When it comes to fintech, Lithuania is punching well above its weight. An EU leader by the number of licensed e-money and payment institutions, No. 6 in the OECD by tax competitiveness, and No. 9 globally in terms of ML/TF risk, the country offers the perfect business and regulatory environment for aspiring fintechs.

With 265 (and counting) fintech companies, Lithuania is where many new ideas and practices are put to the test. For this article, we sat down with the leaders of several major fintechs that have a presence in Lithuania to discuss approaches to riding out the economic downturn that's been on everyone's mind these past months.

TIP #1: Get inspired and innovate

To stay afloat, you have to innovate and invest in product development. Juozas Kaminskas, VP for Banking and Issuing and Lithuania Managing Director at Canadian fintech Nuvei, says the drive to create comes from understanding client aspirations. "It's about supporting clients' needs, having a passion and focus to innovate and deliver, which ultimately helps businesses accelerate their growth." The drive to innovate has seen a quadrupling in Nuvei's global workforce over the past four years. "And we are still hiring," adds Kaminskas.

The managing Director of the leading secure payment processing company Shift4 agrees that agility is a must-have for any fintech: "the fintech sector is subject to all manners of risk that also affects other industries. And yet, it is not all doom and gloom. Our goal today is to continue generating optimism within the sector by relentlessly pursuing the development of innovations." Optimism is reflected in the numbers as well: Shift4 grew by 65% in 2021.

TIP #2: Focus on customers and diversify

Co-founder and COO at the financial services venture TransferGo, Justinas Lasevičius, says that having customer satisfaction and diversification as one's North Star helps to keep all other things in perspective:

"We know that as long as we listen to our customers, we'll always find ways to improve, grow, and make our business stronger. On top of that, we always tend to go with the "diversification first" approach. In our case, this means adding new consumer segments to our network of 2,600+ remittance corridors across 34 send and 163 receive destinations."

TIP #3: Help yourself by helping others

When it comes to weathering the storms, it is important to understand that the customers are going through similar difficulties. Chris Lybeer, CSO at Revel Systems – a cloud-based POS and business management company – emphasised the importance of helping one's clients deal with their challenges:

"At Revel, we focus on bringing new features and solutions to market that help our clients mitigate both current and pending economic risks by making it easier for them to increase revenue and improve their bottom lines. Examples include loyalty programmes to secure repeat customers, mobile order systems to reduce line churn and self-service kiosks that free up time for employees to focus on more strategic and service-oriented tasks."

TIP#4: Optimise your product and finances

Beyond looking for "M&A opportunities surfaced by the current markets" and waiting for them to recover, the co-founder and CEO of the leading embedded finance fintech Railsr, Nigel Verdon, advised other fintechs to trim as much fat as possible and optimise their cash flows:

"We must be patient and focus on our playbook for challenging markets by reducing cash burn, extending the cash runway, and enhancing our products by any means necessary – including the removal of vanity features."

TIP#5: Reward and retain talent

Keeping talent happy during an economic downturn is a challenging task. That is where Revel Systems started implementing a creative programme – the Great Employee Moment (GEM) Awards – that features four tiers (Topaz, Sapphire, Ruby, and Emerald), each coming with its own special reward:

"Employee programmes are vital to our success, and our HR team is always looking for new ways to secure and retain top-level specialists. The GEM is quite unique. Typically, earning a spot on a company-sponsored annual trip is reserved for sales account execs that have met their quotas. With GEM, however, trips are made available to all employees who've received an Emerald nomination from a co-worker. This year, over 50 employees and their plus ones enjoyed a four-night trip to the Bahamas."

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Lithuania sees steady FDI growth against the backdrop of geopolitical issues

Despite global economic challenges and the war in Ukraine, Lithuania has witnessed steady growth in FDI, proving that international companies continue to see the country as a stable partner for expansion.

During the first half of 2022, Invest Lithuania helped attract 40% more FDI projects than in H1 2021: 31 compared to 22. Fifteen new companies have announced plans to establish operations here, while 16 companies have confirmed expansion projects.

The Minister of the Economy and Innovation, Ausrine Armonaite, stresses this even split between new entrants and expansions is a healthy growth sign: "There has been no shortage of discussion about the war's possible impact on the region's economy, but Lithuania has retained the image of an attractive business partner. Lithuania's membership in NATO and the European Union, its developed infrastructure, tax incentives, and highly-qualified talents create a favorable business environment for international companies."

Tech remains the driving force

With 17 out of 31 FDI projects being tech, the sector asserts its dominance as the country becomes an increasingly active tech hub. The strongest player in the landscape is fintech – Lithuania has the most licensed fintech institutions (147) in the EU. This has led to the growing support ecosystem: tech-focused lawyers, HR, and communication professionals delivering substantial aid to all processes.

Amongst the tech newcomers, American in-location experience management leader Raydiant, establishing its largest office outside the US, and German IT services powerhouse GOD, opening offices in the two largest Lithuanian cities.

Manufacturing projects on the rise

Lithuania has also welcomed a significant number of manufacturing projects in 2022. New manufacturing facilities are one of the strongest indications of a healthy and stable investment environment. Global bicycle industry leader PON.Bike announced expanding to Lithuania, Ryanair group's FRC LT will grow an aircraft maintenance facility, and a veteran Dovista will further improve their Lithuanian factory.

The question of energy security is likely to become a pressing issue for manufacturing companies. The fact that Lithuania is the first EU country to have completely severed itself from a dependency on Russian gas may well act in its favor.

Lithuania has repeatedly proven that it is peculiarly suited to withstanding and proactively responding to geopolitical shocks. With its responsive governmental institutions, and robust, community-minded populace, Lithuania reacts to situations with the agility and creativity of a start-up.