The Estonian bank that works with TransferWise and Coinbase is opening in the UK to catch the 'second wave of fintech'
- Estonian bank LHV is launching in the UK.
- The bank plans to work with fintech businesses and already works with TransferWise and Coinbase.
- LHV's UK head is predicting a "second wave" of fintech driven by Open Banking reforms.
LONDON - Estonian bank LHV is opening a UK branch in a bid to win more financial technology business in what it's CEO believes is "the fintech capital of Europe."
"We see a lot of questions coming from UK companies and fintechs about partnering with us," said Andres Kitter, head of retail banking at LHV and head of the bank's UK branch.
LHV was founded in 1999 and is part of the largest financial group in Estonia. The bank already works with UK-headquartered online money transfer service TransferWise, whose cofounders are Estonian, and the European branch of Coinbase, the US cryptocurrency exchange.
The bank wants to become "an innovative partner for fintech and payment companies" in the UK, Kitter said.
Kitter said LHV had decided to enter the UK market now because of recent Open Banking reforms, which require UK banks to share customer data with third parties if customers agree. Similar EU rules are coming later this year, dubbed PSD2.
"We do expect the Open Banking initiative and PSD2 in Europe create to a second wave of fintechs, which will be building consumer and SME-focused businesses on the infrastructure," Kitter said.
"We really think that London is the place to be," he added. "London is the fintech capital of Europe."
Kitter said that Brexit was "a little bit of a surprise" but said: "The Financial Conduct Authority (FCA) is one of the thought leaders on how to regulate and how to work with fintech companies and that won't change. London will be the fintech capital in Europe and the world and that won't change."
LHV, which is licensed by the FCA, aims to have five staff working in the UK by the end of the year helping to sign up new customers. Kitter says the bank will work with companies at an earlier stage than traditional lenders.
"I think large banks aren't in a position to look at fintechs in early stages because they need more time and more focus to make sure you really understand what they're doing and that it's suitable for the bank's processes," he said. "We work with quite a few small companies. We have our technical platform which is capable of delivering service changes quite quickly to the market."