As a client of Bankera (providing financial services through UAB Pervesk, a licensed Electronic Money Institution in Lithuania), it is vital to understand the distinction between a \"bank\" and an \"Electronic Money Institution\" (EMI). Specifically, how does segregation of funds differ from deposit insurance, and why is the industry shifting its safeguarding strategies in 2025?
The most common question we receive is about the safety of funds compared to a traditional bank account. The distinction lies in the legal method used to protect your money.
Traditional banks operate on a \"fractional reserve\" model. They take your deposit and lend a large portion of it out to other clients (e.g., for mortgages or business loans). Because they lend out your money, there is a risk the bank could run out of liquid cash if everyone withdrew their funds simultaneously. To counter this, governments provide deposit insurance (usually up to €100,000 in the EU), which guarantees your money if the bank fails.
EMIs like Bankera do not lend your money. We are not allowed to use your funds for our own operational expenses, investments, or loans. Instead, we use a method called segregation of funds.
Simply put your funds are kept in separate accounts from the company’s own funds. If the EMI were to face financial difficulties or even go bankrupt, the funds in these segregated accounts cannot be touched by creditors. They legally belong to you, not the EMI. Because your money is backed 1:1 by liquid assets and not lent out, it is always available for withdrawal. Therefore, traditional deposit insurance is not applicable in the same way.
At Bankera, we strictly adhere to the safeguarding requirements set by the Bank of Lithuania. According to our internal policies and regulatory obligations, we safeguard 100% of client funds by holding them in segregated accounts at reputable credit institutions in Lithuania and other EU jurisdictions and in secure, low-risk liquid assets, such as government bonds or money market funds. For a brief explanation of our measures, you can check our FAQ: Is my money safe with Bankera?
Lithuania is one of the main fintech hubs in Europe, where a lot of EMIs operate under the supervision of the Bank of Lithuania. Bankera conducted an investigation on the latest data to show you how the sector is evolving. The investigation revealed that the first two quarters of 2025 marked a historic shift in how EMIs safeguard funds.
Historically, many EMIs safeguarded client funds directly at the Central Bank (Bank of Lithuania) because it is the safest possible counterparty. However, a major policy change by the European Central Bank (ECB), the Eurosystem policy on access by non-bank PSPs, mandated that by April 2025, non-bank Payment Service Providers (PSPs) must cease using central bank accounts for safeguarding purposes.
The rationale is to distinguish clearly between \"central bank money\" and \"commercial money\" and to maintain financial stability within the commercial banking sector.
Reviewing the operational indicators of the sector for the first two quarters of 2025, we see the direct result of this regulation. First, there is a decrease in central bank safeguarding. As the April 2025 deadline passed, the volume of client funds held at the central bank dropped steeply as EMIs migrated these funds elsewhere. Second, a significant portion of these funds has moved to segregated accounts within commercial banks. At the same time we witness a continued upward trend in funds being invested in secure, liquid low-risk assets (such as short-term government securities), offering a safe alternative to bank deposits.
This data confirms that the sector has successfully adapted to the new ECB requirements without compromising the safety or liquidity of client funds.
A key strength of the Lithuanian fintech environment is its transparency. The Bank of Lithuania provides detailed operational indicators for EMIs, allowing you to personally verify how funds are safeguarded across the industry. Furthermore, the active status of an institution's license can always be checked on the official Bank of Lithuania market participants list. Additionally, institutions such as UAB Pervesk undergo regular audits and capital adequacy evaluations.
For us, safeguarding is not just a regulatory requirement. It is the foundation of our relationship with you. By segregating customer funds and maintaining 100% liquidity, EMIs like Bankera ensure that your money is available whenever you need it. As the 2025 data shows, even as regulations shift where these funds are held (moving from central to commercial banks), the core principle remains unchanged: your money is segregated, secure, and ready for you.
The previous entry on this topic can be found at the following link: Why Are Your Funds Safe?.
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