The Migrant Leading Lithuania’s Fintech Sector
WHY YOU SHOULD CARE
Because everyone needs to get paid.
By Dan Peleschuk
Sitting comfortably in a sleek office just a stone’s throw from the center of Vilnius, Lithuania’s charming capital, Daumantas Dvilinskas waxes poetic about the plight of Europe’s economic migrants. “It’s a very peculiar life that’s sometimes a bit misunderstood by traditional media,” he says, “which portray these migrants as unpatriotic, or people that have lost their way.” Although he projects an image that’s more privileged frat boy than frazzled paycheck-chaser, the 29-year-old entrepreneur knows a thing or two about life abroad as a migrant.
Not long ago, he was one. First as a wide-eyed university student, then as a serial entrepreneur, the Lithuanian-born co-founder and CEO of one of his country’s most successful financial startups is familiar with the frustrations often involved in sending cash across borders. Traditional banks, he says, charge migrants too much for payments that are unreliable, carry hidden fees and take too long to reach their families back home. Dvilinskas has long believed these everyday “heroes,” as he describes them, deserve better service.
That’s why he and several others launched TransferGo, an electronic payment system that Dvilinskas claims puts its customers first by offering fast, inexpensive and reliable service. Part of Lithuania’s blossoming financial technology sector, TransferGo’s success also helps reveal how the Baltic country of 2.8 million has become a hub for technology startups, especially within the world of finance.
Dvilinskas estimates that on average, these economic migrants send 20 percent of their annual salaries back home.
Like so many entrepreneurial ventures, TransferGo was born of pragmatism and real-world experience. After finishing his business studies at Lancaster University in the U.K., Dvilinskas and a partner launched a linen merchandising company with a supply chain based in the Baltics, meaning international money transfers were a basic part of business. But after a particular bank transaction gone wrong — it sent money in the wrong currency, costing the business suppliers — he knew they needed a better way to move cash around.
That’s when his chief financial officer came up with what would become TransferGo’s guiding principle: local in, local out. Playing the middleman, the service takes a digital payment from a sender’s local bank account and then deposits it to the recipient’s local account. Since there’s no cash involved, it’s technically not a cross-border payment. The result is same-day — or even same-hour — transfers with low fees and no online accounts. “It’s a simple system,” Dvilinskas says, “and it works really well.”
When Dvilinskas and his three co-founders launched TransferGo in 2012, they believed the countless migrants who rely on such transactions to feed their families in far-flung locations throughout Europe could benefit. With more than 200,000 customers today — and looking to expand their service beyond Europe — they seem to have been right. Investors, meanwhile, praise the company’s leadership. David Nangle, CEO of Vostok Emerging Finance, which backs TransferGo, says Dvilinskas projects youthful energy and espouses practicality. “He’s very strong,” Nangle says. “Strong-willed, strong-minded, with real determination and a real will to win.” Nangle adds that TransferGo is tapping into a $600 billion industry, while also helping revolutionize the way people send money. “They’re doing it in a very efficient, digital, modern and cheaper way,” he says.
Successful as it is, TransferGo is part of a broader trend. Boasting a well-educated and tech-savvy population, Lithuania has fast become fertile soil for entrepreneurship in both financial technology and IT in general. Forward-thinking officials have created a comfortable legal and regulatory climate that has produced an array of startups and persuaded major international brands — such as Western Union, Nasdaq and leading Scandinavian banks like Sweden’s SEB and Norway’s DNB — to establish local research and development teams.
According to Darius Kavaliauskas, head of Rise Vilnius, a startup incubator run by financial services giant Barclays, the country’s small size is conducive to experimenting with new ideas, while a tight-knit support network helps grease the bureaucratic wheels. Then there’s the pride that comes with punching way above your weight. “We understand that we’re creating not only for ourselves, but for everyone else around us,” Kavaliauskas says. “And that unites us.”
Solidarity is the operative philosophy behind TransferGo. Dvilinskas says that along with his co-founders, who shared similar expat experiences but in different locations, he noticed that hardworking migrants form a key economic pillar for their home countries. It’s believed that well over half a million Lithuanians live abroad — and that’s in addition to those who’ve left other former Soviet republics. Dvilinskas estimates that on average, these economic migrants send 20 percent of their annual salaries back home.
But not everyone’s sold on what Dvilinskas and his partners are offering. He admits that when it comes to financial services, consumers are typically conservative about their picks — often opting to overpay just for the sake of familiarity, or to avoid a deal that seems too good to be true. It’s a scenario that likely describes much of TransferGo’s target audience, many of whom hail from countries where corruption or financial mismanagement has eroded public trust.
Yet given the chance to prove itself, Dvilinskas believes TransferGo is a win-win. “Our job,” he says, “is to educate consumers that there’s a new, better way.” Trust him — he’s been there.
- Dan Peleschuk, OZY AuthorContact Dan Peleschuk