The Lithuanian government is aiming to encourage state authorities at all levels to invest in new technologies, including fintech, by putting almost €4.5m (about £3.85m) behind a ‘GovTech sandbox’.
The initiative has been instigated by GovTech Lab Lithuania, a unit within the Agency for Science, Innovation and Technology (MITA). It is being funded by MITA itself and one of the agency’s two parent departments – the Ministry of Economy and Innovation.
Through the initiative public authorities can apply for funding to procure pilot GovTech solutions – digital and new technologies designed for public sector use. The authorities would not be buying an already created, full solution – instead, the aim is to experiment with new ways to solve challenges they face.
The decision to provide financial incentives as a carrot for authorities to invest in new technology comes as governments across the world increase their investment in digital solutions and services, a trend accelerated by the Covid-19 pandemic.
In Lithuania, in an initial funding round, up to €53,000 will be made available per pilot GovTech solution for up to 30 different challenges from public sector institutions. The programme’s full budget is almost €4.5m, which would roughly equate to three rounds of 30 initiatives each receiving the maximum ‘up to €53,000’ funding.
Aiming to ‘transform citizens’ encounters with public services’
GovTech Lab Lithuania launched in 2019 to identify public sector challenges that could potentially be addressed by emerging technologies – and engage start-ups and SMEs in the co-creation of innovative solutions.
In an announcement of the ‘sandbox’, GovTech Lab Lithuania says that it has seen ‘extensive and increasing’ interest from public authorities in increasing their use of technology to deliver citizen services. The new programme aims to propel this interest into actual experimentation and deployment – and also has global ambitions.
“The end goal of the programme is to transform citizens’ daily encounters with public services globally,” said MITA head Birutė Bukauskaitė. “We hope that Lithuania will become the launchpad for successful GovTech companies with ground-breaking and globally attractive solutions.”
The programme is open to any public sector institution (with the exception of universities), ranging from local and municipal authorities to larger regional and national state institutions.
An ‘open call’ for challenges is running until 23 June. Selected institutions will then have about one month to prepare for a ‘design contest’ that will lead to procurement.
Fintech sandboxes ‘paved the way’
Sandboxes – test-spaces that allow fintech start-ups and other innovators to conduct experiments in a controlled environment under regulatory supervision – are becoming increasingly popular worldwide.
Lithuania’s sandbox is not a regulatory sandbox, which makes it different from regulator-backed sandbox, such as the UK Financial Conduct Authority (FCA)’s relatively well-known sandbox.
The Baltic state, which has a population of about 2.7 million, already has a regulatory sandbox, launched in 2018, as well as a blockchain sandbox, ‘LBChain’. Both are overseen by the Bank of Lithuania (Lietuvos Bankas). The country also has an ‘EnergyTech’ sandbox, also launched in 2018, overseen by a state-controlled energy group.
“It is hard to predict what kind of challenges the institutions will submit,” a GovTech Lab Lithuania spokesperson told Global Government Fintech about the prospects for the GovTech sandbox. “Lithuania has already paved a really great way to encourage innovations with the fintech sandboxes, so we hope that this will inspire the challenge owners to experiment with fintech solutions in their institutions as well.”
GovTech’s growth potential
The pandemic has driven greater investment into tech-based innovation such as artificial intelligence (AI) and machine-learning by businesses with a public-sector focus, according to a report published earlier this year.
The ‘StateUp 21’ study – published by StateUp, a London-based advisory firm – analysed almost 450 GovTech start-ups around the world and identified 21 companies that it described as the ‘most promising’.
‘Urban and local’ tech-focused firms comprised the largest sub-sector (28 per cent) of companies analysed, reflecting the spending power of cities, as well as a sense that procurement may be easier at the local level, according to the report.
One member of the ‘21’ was a Lithuanian firm, Trafi, which has developed a ‘mobility-as-a-service’ platform that enables real-time mapping of transport possibilities using publicly available traffic data. The Vilnius-headquartered company has expanded internationally to countries including Germany, as well as more recently into Latin America.
MITA was created in 2010 by the-then Ministry of Economy and the Ministry of Education and Science (now the Ministry of Education, Science and Sport). Its activities are jointly supported and funded by the two departments.
GLOBAL GOVERNMENT FINTECH: FURTHER READING
‘Lithuania opens public-private anti-money laundering centre’ – our news story (3 June 2021) on the opening of a Centre of Excellence in Anti-Money Laundering (AML) as Lithuania looks to boost co-ordination between state authorities and the private sector in tackling illegal financial activity
‘Lithuania eyes RegTech potential as fintech sector grows’ – our news story (24 Feb 2021) about a RegTech tool presented during an event organised by GovTech Lab Lithuania (our story also covered a report on the country’s fintech sector)
‘Pandemic propels GovTech investment surge, says report’ – our news story (27 Jan 2021) on StateUp’s study (see news story above)