While Vilnius, capital city to the small EU nation of Lithuania, held the highest number per capita of start-ups in the software and IT services sector between 2016 and 2018, local financial services provider ConnectPay is standing out.
Licensed in early 2018, ConnectPay has grown its monthly transactions 200 times over, increasing monthly turnover from €10.5 million in September 2018 to €101 million in September 2019.
“At the moment, funds that our customers decided to keep with us are already close to €50 million and growing rapidly,” said Liutauras Varanavičius, head of business development at ConnectPay.
While the company is moving towards a significant 30 per cent headcount increase, the existing diverse client portfolio stands out by having several major gaming companies onboard.
When asked how to achieve such clientele in a single operational year, Varanavičius said the most important feature in business is to follow your brand promise.
“ConnectPay stands for banking made easy and it‘s our top priority to simplify processes and make it truly easy. In a highly overcrowded financial industry our services stand out, because we offer a working product and we talk as business to business and not as bankers to business. We always look for possibilities and options because every case is different and customising is key,“ he said.
As Bank of Valletta has chosen to go down a widely escaled de-risking road, closing many accounts for clients listed as high risk, this raises the question of whether more institutional banking is going to turn it‘s back to such diverse clients as gambling and crypto.
Rather than manage these relatively more risky clients, traditional financial institutions often choose to end the relationship, consequently minimising their own risk exposure.
Varanavičius explained the difficulties of managing relatively high risk clients.
“Yes, it takes more time, requires more human resources, it also requires a deep understanding of every single business case. However, it is the whole beauty of the process as you get to know your customer and by every new onboarded company you learn new ways to help businesses and stay 100 per cent compliant.”
So it‘s all just a question of effort and point of view?
“We work under the same rules and regulations as any institutional bank, we are under the same radar but we have intentionally chosen to walk the extra mile for our clients instead of under-serving them, or in this case – shutting them off,“ he said.
While operating on a diverse portfolio, ConnectPay currently claims that more than 30 per cent of their clients are based in Malta.
“We had really mixed feelings when the news about BOV came out. Many of our clients come from Malta where a business climate of support for internet-focused businesses has been the country’s USP for a very long time. Now the cards may be changing as one of the country’s main banks has announced its change in policy. We can surely review and onboard most of BOV‘s clients, but the question remains – will this have a snowball effect?,” Varanavičius said.
ConnectPay operates as a modern bank facilitating services for internet-based companies by making compliance and regulation work for them, not against them.
Other than traditional portfolio of Iban accounts, SEPA and SWIFT payments, prepaid cards, our business is fully API-based, allowing streamline integration to any partners business processes and operations. Starting with PSD2 to APIs for financial institutions, we cover it all providing many easy banking solutions.
After significant injections towards fraud prevention and automated compliance, it’s the first company in Lithuania to have such a level of automated procedures.
Mid-2019, ConnectPay was recognised as Best Payment Service Provider in the Baltics by the Mare Balticum Gaming Summit.
Vilnius has a clear strategy for attracting tech start-ups through a focus on emphasising its business-friendly regulatory environment and open data policy (which makes most municipal data open to the public and free to use by tech start-ups) and helping new companies integrate into the city.
Investment by tech start-ups has been on the rise in terms of both projects and capital expenditure, going from $1.27bn invested in 192 projects in 2016 to $2.43bn invested in 335 projects in 2017, and finally to $3.68bn invested in 470 projects in 2018. This increase has coincided with the rise of venture capital funding, which reached a decade high of $220bn in 2018 according to Startup Genome, implying significant potential for the development of many future tech start-up ecosystems.
In light of this, Vilnius houses some of the best minds and is a perfect location to develop digital business.