Why Most Banks Say No to Fintechs — And What Magnetiq Bank Does Instead
Jelena Jurane, Head of Sales at Magnetiq Bank, has a background that sits at a rare intersection: years inside traditional banking, then a pivot into fintech, and now back in a bank that was deliberately built to serve the companies most banks turn away. In a recent conversation, she broke down why fintechs remain underserved, what it actually takes to bank them properly, and where Magnetiq Bank is placing its bets next.
TL;DR / Quick Answer
– Most traditional banks lack both the infrastructure and the risk appetite to serve electronic money institutions (EMIs), payment institutions (PIs), and MiCA-licensed companies — Magnetiq Bank was built specifically to close that gap.
– The single biggest gap traditional banks leave is API access — fintechs need system-to-system connectivity, not an internet banking portal.
– Latvia is currently the fastest-growing market for new license applications, driven by a surge in MiCA and EMI filings.
– Magnetiq Bank’s revenue model is fee-driven rather than interest-driven, which makes Lending-as-a-Service (LaaS) a strategic priority for deploying underutilised capital.
What Makes Fintechs a Misunderstood Client Segment?
The core problem is not that fintechs are risky — it is that most banks do not understand how they work. EMIs, PIs, and MiCA-licensed companies operate in a way that demands a different kind of due diligence. Before a bank can assess risk, it needs to understand the business model. Most institutions are not willing to build that knowledge, so they simply decline.
The clients Magnetiq Bank serves are also deeply international by nature. A company with founders based in Germany, an entity registered in Malta, a second license in Cyprus, and a banking account in Latvia is not unusual — it is the norm. That geographic complexity is something traditional banks are not structured to handle.
Magnetiq Bank did not build this focus from a blank slate either. It inherited a legacy client base and transformed from a branch-era model — paper forms, in-person signings — into a fully digital operation capable of meeting the onboarding standards that digital-native fintechs expect.
How Does Magnetiq Bank Handle Compliance at Scale?
Regulators do not treat Magnetiq Bank as a specialist fintech bank — they treat it as a bank, full stop, and apply the same standards accordingly. In practice, the compliance bar is even higher than for a typical corporate bank.
When Magnetiq Bank onboards a payment institution, it is not only conducting KYC on that institution. It is also performing due diligence on the control systems that institution uses to conduct KYC on its own end customers. That layered responsibility makes onboarding thorough and time-consuming — but most fintech clients expect this. They know opening an account with a regulated European bank is not a one-day event. The ones who have been through it before arrive prepared.
What Traditional Banks Get Wrong: The Two Gaps That Matter Most
Two failures define how traditional banks fall short with fintech clients:
– API access. Fintechs do not want to log in to an internet banking portal. They need their systems to talk directly to the bank’s systems — fast, automated, and integrated into their own workflows. Most traditional banks cannot offer this.
– Risk appetite. Many fintechs — including Latvian-registered startups applying for a Latvian license, with Latvian capital — are told no before a conversation even begins. Magnetiq Bank is now recommended directly by the Bank of Latvia to companies applying for a license and looking for a banking partner.
Which Markets Are Growing Right Now?
The more established markets for mature EMIs remain the UK (particularly for safeguarding accounts), Malta, and Cyprus. But for companies at the earliest stage — just applying for a license, not yet holding one — Latvia is currently the most active market. The volume of MiCA and EMI applications flowing through Latvia is significant, and Magnetiq Bank is seeing that demand directly.
Lithuania is also active. Ukraine is a market to watch longer term: the fintech infrastructure there is underserved, and if credible companies emerge and grow, Magnetiq Bank is positioned to serve them.
Who Else Does Magnetiq Bank Serve Beyond EMIs and PIs?
The fintech label covers more ground than it might suggest. Magnetiq Bank’s client base includes:
– Payment institutions and EMIs
– Crowdfunding platforms
– Licensed forex brokerages
– Crypto-asset service providers (CASPs) operating under MiCA
– Online consumer lenders
The online lending segment connects directly to Magnetiq Bank’s newest product. Lending-as-a-Service (LaaS) enables companies that have the technology, the customer base, and the marketing infrastructure — but not a banking license — to offer consumer loans under their own brand. Magnetiq Bank handles the credit scoring, issues the loans, and holds them on its balance sheet. The partner handles everything client-facing.
The first live example: a German partner that had all the infrastructure in place but needed a licensed bank to issue the loans. Magnetiq Bank now holds German consumer loan assets without having a physical presence in Germany. That is embedded finance working exactly as it should.
How Does Magnetiq Bank Manage Its Capital?
Magnetiq Bank’s balance sheet looks different from a classical bank. Where a traditional institution earns primarily from interest income on loans, Magnetiq Bank earns primarily from fees — transaction fees, payment processing, service fees. Interest income from lending is currently the smaller share.
That means Magnetiq Bank is sitting on capital it is not yet fully deploying. The priority is changing that — and Lending-as-a-Service is the main vehicle. The bank is part of the Signet Bank Group, whose parent has deep experience managing large capital positions, and that expertise is informing how Magnetiq Bank approaches this challenge.
The goal is not growth for its own sake. It is to put capital to work in a way that directly serves the clients already in the network — by giving them access to lending infrastructure they could not build alone.
FAQ
What types of companies does Magnetiq Bank work with?
Magnetiq Bank serves fintech companies including EMIs, payment institutions, MiCA-licensed crypto-asset service providers, crowdfunding platforms, licensed forex brokerages, and online consumer lenders. The common thread is institutional status and a need for European banking infrastructure that most traditional banks are unwilling or unable to provide.
Why is the onboarding process so extensive?
Because Magnetiq Bank operates under full EU banking regulation, onboarding requires thorough KYC and AML checks — not only on the client company itself, but also on the systems that client uses to verify its own end customers. Fintech clients are typically familiar with this process and come prepared. It is not a barrier; it is a standard.
What is Lending-as-a-Service and who is it for?
Lending-as-a-Service (LaaS) is a product that allows companies to offer consumer or business loans under their own brand without holding a banking license. The partner handles customer acquisition, marketing, and onboarding. Magnetiq Bank handles credit scoring, loan issuance, and regulatory compliance. It is designed for platforms and fintechs that have the customer base but not the banking infrastructure.
Does Magnetiq Bank compete with banks in Dubai or London?
Not directly. Dubai-based institutions serve different markets with different regulatory frameworks. UK-licensed companies are a closer fit — they operate under a regulatory mindset that is compatible with European standards, and Magnetiq Bank can serve them while ensuring compliance with EU AML and sanctions requirements. The gap between a UK fintech and a Latvian bank is smaller than it appears.
What is the single most important thing Magnetiq Bank offers that traditional banks do not?
API-first banking infrastructure combined with the willingness to actually understand and serve fintech business models. Traditional banks lack both the technical integration and the institutional knowledge to assess fintech clients properly. Magnetiq Bank was built around exactly that capability.
—
Magnetiq Bank Serves the Fintechs Banks Refuse
