In many ways, the Baltic countries are ideally suited for financial-technology firms. Estonia, the birthplace of Skype, has long touted its e-governance prowess. Lithuania has positioned itself as a post-Brexit gateway to the EU for fintech startups. But there’s more to it than that.
One huge factor is Brexit itself, which removed U.K.-based heavyweights from the EU rankings. London-based Funding Circle has lent the equivalent of $7.6 billion to British companies.
Another factor is regulation.
While the U.K. was quick to pass crowdfunding legislation, only Lithuania among the Baltic countries adopted a similar approach, in 2016. EU-wide rules governing the industry are only now in the works.
“The free approach was more favorable for faster growth,” said Jekaterina Govina, head of supervision at Lithuania’s central bank. “It’s always easier to develop a business when there’s no state involvement, no inspection behind your back supervising or demanding permits.”
Peer-to-peer growth in Lithuania is “more sustainable than in countries that don’t have regulatory regimes,” according to Govina.
Clients lending through Mintos are based mainly in Western Europe, with Germany among its biggest markets. Routed by its IT hub in Riga, their cash can purchase loans from related- or third-party credit providers in as many as 30 countries -- as far afield as Indonesia and Botswana.
That exotic-sounding journey may scare some lenders -- especially when packages offered by originators can include payday loans and carry interest rates of as much as 5000%.
But even in typically conservative Germany there’s booming demand.
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