Steps for Fintech Startups to Obtain a Banking License in Lithuania and Estonia

Starting a fintech company with a banking license opens many doors, including the ability to offer a wider range of financial services and build trust with customers. Lithuania and Estonia have become attractive destinations for fintech startups seeking banking licenses due to their supportive regulatory environments and access to the European Union market. This post explains the key steps fintech startups need to follow to obtain a banking license in these two countries, highlighting practical details and examples to help you navigate the process.

Modern banking building in Vilnius, Lithuania

Modern banking building in Vilnius, Lithuania, representing fintech licensing opportunities

Understanding the Regulatory Landscape

Before applying for a banking license, fintech startups must understand the regulatory frameworks in Lithuania and Estonia. Both countries are members of the European Union and follow the EU’s banking directives, but each has its own national supervisory authority and specific requirements.

• Lithuania: The Bank of Lithuania (Lietuvos bankas) supervises banks and issues licenses. Lithuania offers a relatively fast and transparent licensing process, attracting many fintech companies.

• Estonia: The Estonian Financial Supervision Authority (Finantsinspektsioon) regulates banks. Estonia is known for its digital-friendly environment and e-residency program, which can simplify company registration.

  
  

Both countries require compliance with the EU’s Capital Requirements Directive (CRD IV) and Anti-Money Laundering (AML) regulations.

Preparing Your Business Plan and Documentation

A strong, detailed business plan is essential. Regulators want to see that your fintech startup has a clear strategy, sustainable business model, and risk management framework.

Your business plan should include:

• Description of services and products

• Target market and customer segments

• Governance structure and management team profiles

• Financial projections for at least three years

• Risk management policies, including AML and cybersecurity measures

• Capital adequacy and liquidity plans

  
  

Along with the business plan, prepare the following documents:

• Articles of association and company registration certificates

• Proof of initial capital (minimum capital requirements vary)

• Fit and proper declarations for key persons

• Internal policies and procedures manuals

  
  

Meeting Capital Requirements

Both Lithuania and Estonia require banks to hold a minimum initial capital before licensing:

• Lithuania: Minimum €1.5 million for a credit institution license

• Estonia: Minimum €1.5 million for a credit institution license

  
  

This capital must be fully paid up and verifiable. Regulators assess whether the capital is sufficient to cover operational risks and support business growth.

Submitting the Application

Once your documentation is ready, submit the application to the relevant authority:

• Bank of Lithuania for Lithuania

• Estonian Financial Supervision Authority for Estonia

  
  

The application includes all documents, fees, and declarations. The authorities will review your submission for completeness and compliance.

Regulatory Review and Due Diligence

After submission, expect a thorough review process that can take 6 to 12 months. Regulators will:

• Assess the business plan and financial projections

• Conduct background checks on shareholders and management

• Evaluate internal controls and risk management systems

• Verify compliance with AML and cybersecurity standards

  
  

During this phase, regulators may request additional information or clarifications.

Setting Up Governance and Compliance Structures

Strong governance is critical. Regulators expect fintech startups to have:

• A board of directors with relevant experience

• Clear roles and responsibilities for management

• Compliance officers dedicated to AML and regulatory reporting

• Internal audit functions

  
  

Implementing these structures early helps demonstrate your commitment to regulatory standards.

Obtaining the License and Post-Licensing Obligations

Once approved, you will receive the banking license, allowing you to operate legally as a bank. However, licensing is not the end of regulatory responsibilities.

Post-licensing obligations include:

• Regular reporting to the supervisory authority

• Ongoing compliance with capital and liquidity requirements

• Continuous AML monitoring and reporting suspicious activities

• Periodic audits and inspections

  
  

Failure to meet these obligations can result in fines or license revocation.

Practical Examples of Fintechs in Lithuania and Estonia

Several fintech startups have successfully obtained banking licenses in these countries, setting examples for newcomers:

• Revolut: Initially licensed in Lithuania, Revolut expanded its banking services across Europe.

• Monese: Obtained a banking license in Lithuania to offer mobile banking services.

• TransferWise (now Wise): While not a bank, it operates with a payment institution license in Estonia, showing the country’s fintech-friendly environment.

  
  

These companies benefited from clear regulatory guidance and supportive ecosystems.

Tips for a Smooth Licensing Process

• Engage with local legal and compliance experts early

• Maintain transparent communication with regulators

• Prepare for detailed scrutiny of your management team and shareholders

• Invest in robust IT and cybersecurity infrastructure

• Keep your business plan realistic and data-driven