LITHUANIA Law and Practice Contributed by: Donatas Šliora and Marius Matiukas, ADON legal
Role of Artificial Intelligence (AI) in Fintech In Lithuania, many fintechs and even traditional financial institutions have begun integrating AI. There is a general trend towards automation of services and fully online operations in banking and finance. For example, some established market participants now offer robo-advisers as part of their investment services, providing algorithm-driven portfolio advice to clients. Oth - ers are using AI behind the scenes to automate internal processes related to loan underwriting, AML, sanctions and fraud screening as well as customer onboarding – which previously required significant manual effort. The aforemen - tioned Fintech Strategy 2023–2028 also encour - ages development of AI solutions, even setting up innovation funds and financial stimulus for start-ups to foster AI, blockchain and robotic process automation projects. While AI is becoming an almost essential tool for fintechs in order to stay competitive, as with all businesses they will have to take into account new EU regulations on AI and the prohibition of unethical AI systems as they are understood under the new AI Act. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models Fintech Landscape Lithuania’s fintech landscape mirrors broader global trends while maintaining its own distinct flavour. The sector’s growth has been particu - larly noticeable in the following fields. Payments The country boasts a competitive environ - ment for payment solutions. Significant play - ers include payment institutions, cross-border
transfer companies, and providers of e-com - merce and mobile wallet technologies. Contin - ued growth in this area is expected, driven by factors such as Lithuania’s tech-savvy popula - tion and the legacy impact of Brexit, which has prompted some companies to relocate their EU operations to Lithuania. Lending Peer-to-peer lending platforms and online credit providers are gaining traction. In addition, Lithu - ania has experienced a boom of licensed crowd - funding service providers developing business models in the Baltics and preparing for EU-wide expansion. Financial software Lithuanian-developed solutions power both back-office operations and customer-facing applications. Companies are active in compli - ance (AML, KYC), accounting and risk manage - ment tools, as well as personal finance manage - ment and investment-related analytics platforms. Emerging and Evolving Areas Insurtech While nascent compared to the sectors above, insurtech activity is increasing. Start-ups are experimenting with peer-to-peer coverage mod - els, usage-based insurance and streamlined dig - ital claims processes. The Bank of Lithuania’s regulatory sandbox provides key support for testing innovative insurance approaches. Blockchain and crypto-assets Lithuania attracts activity in cryptocurrency exchanges and custody services, particularly following updated regulations in this field. The Bank of Lithuania is actively engaged in the evolving conversation around DeFi and potential applications of tokenisation. However, the main
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