Tallinn, the capital of Estonia, is one of a clutch fo Eastern European cities benefiting from increased interest from startups spooked by the uncertainty of Brexit Peter Kollanyi/Bloomberg via Getty Images

Amidst the uncertainty of Brexit, more and more UK companies are rushing to open offices on the continent. While cities like Frankfurt, Paris and Amsterdam are appealing second homes for big companies, some up-and-coming fintech startups are instead looking further east. While before early-stage startups would fight to be part of London’s buzz, they are now turning to Estonia, Lithuania, Poland and Romania as cheaper, less risky locations to make their mark.

Take Lithuania, which even changed onerous regulations to draw UK talent, with the Bank of Lithuania creating a special e-licensing tool last year to make the submission of information for an operating banking license easier and more efficient. Eight UK fintechs now have hubs in Lithuania. “Lately, we have seen a rising interest from UK-based fintechs eager to find a ‘plan B’ solution for the Brexit scenario,” says Mantas Katinas, managing director of Invest Lithuania, a government agency set up to attract foreign investment to the country.


Digital bank Revolut has noticed Lithuania’s efforts to streamline the application process for fintechs and applied for a specialised banking license there. The company already has a team in Lithuania but plans to expand once it receives its license from the regulator, says Andrius Bičeika, the firm’s head of business development.

Specialised banks are subject to the same legal requirements as other commercial banks, which also means they have the same opportunities to “passport” their license and use it in other EU countries. However, there are restrictions on certain activities, which for startups like Revolut makes the application both time and cost efficient.

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Poland is also getting a lot of interest from UK-based fintechs, but not because of its regulatory environment. “What makes Poland highly competitive amongst other European countries are low operational costs,” says Agata Szeliga, a partner in the Polish law firm Soltysinski Kawecki Szlezak. The same goes for Lithuania. According to calculations by Invest Lithuania, a company with 50 full-time employees would save up to €260,000 per year by choosing Vilnius over London on the benefits package alone.

“We looked at Romania, Ukraine and Poland,” says Christian Nentwich, founder and CEO of Duco, a London-based data engineering company that works with financial institutions. They settled on Wroclaw, a small city in the west of Poland. “We were very impressed with the level of education, language ability and positive references from banks and other tech companies,” says Nentwich.


The capital of Estonia, Tallinn, is also noticing a change. “Certain Eastern European cities such as Tallinn have a reputation as being rich in engineering talent,” says Ryan Weeks, editor of the finance website AltFi. “Access to this talent pool, which may well offer lower employment costs than the UK, would be the main benefit for a UK fintech setting up a hub there.”

UK fintechs are being hit by a worrying Brexit talent squeeze Fintech UK fintechs are being hit by a worrying Brexit talent squeeze

So Brexit might lead to jobs for British fintechs – but outside the UK. Duco, for example, will employ 20 people in Poland, before potentially expanding. “The location gives us cost advantages, but it also enables us to hire faster,” says Nentwich. “London and New York are extremely competitive, and we don’t want all our eggs in those baskets only.”

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While Skype, TransferWise, Prezi and Avast all started in Eastern Europe, such successes were typically an exception to the rule. Most the action, especially amongst fintechs, was centred on major hubs, with London chief among them. But, more quickly than many anticipated, Brexit is changing that. And the UK’s loss is Eastern Europe’s gain.


“These cities are primarily interested in becoming entrepreneurial hubs,” says George Panos, professor of finance at Glasgow University. “Such clusters of economic activity are known to spur dynamism to other sectors, generate employment, and induce higher rates of economic growth.”

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