How Regulatory Shifts Are Forcing Fintech Consultancies to Reinvent Themselves | LeapRate | Online Trading Industry News, Broker Intelligence & Fintech Analysis

The European fintech licensing landscape of 2017 was incomparable with today’s regulations.

A securities brokerage could be launched for under a million euros. A regulated Lithuanian EMI – the infrastructure that enables legitimate cross-border money movement – could be acquired for under €350,000. Entry barriers were real but manageable, and well-capitalised smaller operators could genuinely compete.

That window has been closed. The question worth examining is why – and what it means for the consultancies that serve this market.

The Economics Shifted Faster Than Most Anticipated

The trigger was scale. When Revolut, Wise, and N26 entered European markets and began competing aggressively on price and distribution, the unit economics for smaller operators collapsed almost immediately.

Maintaining regulatory standing in a tier-one European jurisdiction – staffing a compliance function, meeting capital requirements, keeping pace with reporting obligations – stopped making commercial sense below a certain volume threshold. The cost of a new start-up application plus staff costs has now risen above €2-3 million, with €5 million representing a more realistic working figure. Lithuanian EMI companies, once obtainable for under €350,000, now command €2-3 million plus associated transaction costs.

For Zitadelle AG, which has been advising financial services businesses on licensing and regulatory strategy since 2017, the shift has fundamentally changed the nature of client conversations. Early mandates centred on helping founders access European markets cost-effectively. Increasingly, the conversation is now about where European entry no longer makes strategic sense, and which alternative jurisdictions offer the regulatory credibility and operational practicality that clients actually need.

The Offshore Turn – and Its Complications

The rational response for many operators has been to look beyond Europe for less saturated jurisdictions. Markets where entry costs are lower and regulatory frameworks more accessible. Mauritius, the Seychelles, Curaçao, South Africa – jurisdictions that have invested meaningfully in developing internationally recognised financial regulatory frameworks, often at a fraction of the cost and timeline of their European equivalents.

This shift is legitimate and, for many business models, entirely appropriate. But it introduces a risk that is underappreciated by operators making the move primarily on cost grounds.

Foreign markets are sometimes easier to enter; however, due to gaps in local regulation or established market practice, certain operations can fall into grey areas that create regulatory friction rather than eliminating it. Moving jurisdiction without proper structural guidance tends to trade one set of compliance problems for another – often less visible ones that surface at the worst possible moment, typically during due diligence or when attempting to bank or process payments through correspondent relationships.

The value of proper advisory support in this environment isn’t just technical knowledge of a given jurisdiction’s licensing requirements. It’s the ability to anticipate how a structure will be perceived by counterparties, correspondent banks, and regulators in the markets the business actually wants to reach.

Diversification as Structural Response

The consultancies that have navigated this period successfully have done so by expanding their jurisdiction coverage in line with where client demand has actually moved – not where it was five years ago.

Zitadelle AG started by assisting clients with licensing applications in Labuan, Malaysia, Mauritius, and Cyprus. The firm now covers Curaçao, Estonia, the UK, and the Netherlands, with each addition reflecting real shifts in where regulated structures are being sought and where regulatory frameworks have developed sufficient credibility to support serious financial businesses.

Alongside licensing consultancy, the firm has developed adjacent infrastructure – HR compliance services through a sister platform, and a dedicated marketplace at financiallicensemarket.com where operators can assess the acquisition of existing regulated entities as an alternative to greenfield applications. For clients where time-to-market is a critical variable, acquiring an existing licence rather than applying from scratch has become an increasingly viable strategic option.

The Broader Market Implication

What this trajectory reflects is a structural maturation of the offshore and emerging-market licensing space. A decade ago, these jurisdictions were primarily used for opacity and cost minimisation. Today, the better-governed among them are competing on genuine regulatory credibility, processing times, and the practical ability to support real financial businesses.

The consultancies best positioned to serve this market are those that treat jurisdiction selection as a strategic advisory exercise – one that accounts for the client’s target markets, counterparty relationships, growth plans, and long-term regulatory exposure – rather than a simple cost comparison.

Regulatory environments will continue to evolve. The firms that survive and grow will be the ones that move with them.”