The Fintech Latvia Association has presented its second industry report, ‘Fintech Pulse 2023’ at the FinTech Forum. It explores the main trends in the fintech sector within the country and out, and serves as a roadmap for potential investors.
The Fintech Latvia Association report provides both industry experts and public sector representatives with conclusions and key insights on current developments in the regulatory framework. This is in addition to the challenges and work that must be done in the days ahead. As a result of these efforts, the report shows how Latvia can strengthen its position as a major fintech hub at the level of the European Union.
“Fintech is playing an emerging role globally, with many countries now focusing on creating an environment that is attractive to fintech companies,” says Tīna Lūse, managing director of the Fintech Latvia Association.
“Therefore, it is crucial that we do not lag behind. Latvia needs to keep pace and establish industry-friendly legislation. The changes that the industry has undergone in recent years cannot be ignored. Hence, it is essential to emphasize the significance of close cooperation between industry stakeholders and state partners, particularly regulators.
“This collaboration, including the integration of the MiCA Regulation on crypto-asset markets into national legislation, may prove to be the most critical factor for Latvia in maintaining its regional leadership in fintech.”
Financial technology is one of the few sectors in Latvia that has seen an increase in the number of employees in recent years and has consistently paid higher salaries than other sectors, according to estimates by the Latvian Ministry of Economics.
The growth of the sector at a national level is also reflected in the Fintech Sector Development Strategy adopted this year. It defines Latvia’s vision for the sector and identifies what needs to be done to stimulate the use of innovation in the financial sector and promote the development of the sector as a whole.
“Fintech Pulse 2023 provides a comprehensive overview of the current fintech landscape in Latvia. It highlights the advantages of Latvia’s relatively small economy,” adds Lūse.
“Firstly, operating in a small country allows companies to establish cooperative relationships with regulators and public sector partners, which are seen as open and approachable. Local fintech firms describe their collaboration with regulators as comparable to working with another fintech company.
“Secondly, due to the strong banking and finance tradition in the region, coupled with the presence of highly skilled professionals in Riga, the largest city in the Baltic region, there is a considerable growth potential for the local fintech sector.
“Additionally, by obtaining a license and conducting business in Latvia, fintech companies demonstrate high exportability, using Latvia’s relatively small market as a ‘sandbox’ or a testing ground for larger markets.”
A guide to succeeding in Latvia
Jūlija Feščenko, head of marketing and communication department, AS LPB Bank, adds: “Challenges and opportunities change as fast as technology. The Digital Report helps us to understand what challenges lie ahead and how to turn them into opportunities. Our participation in this project was not just a choice, it was a responsibility. We want this digital magazine to become an important tool for those who want to understand and succeed in the Latvian fintech industry.”
“Latvia’s supportive and tech-savvy fintech ecosystem has been essential to TWINO’s growth from a local start-up to a global fintech player. Our ongoing collaboration with the regulator underlines a cooperative and adaptive regulatory framework combining transparency, consumer protection, and innovation. We remain committed to working together with other industry players and the Bank of Latvia to make further improvements and adopt best practices to foster growth and more opportunities”, Helvijs Henšelis, CEO of TWINO Investments.
The digital report, with examples of companies in the fintech sector, also provides an overview of how to raise finance, current support mechanisms and access to capital. Fintech Pulse 2023 concludes with a chapter on innovation in the sector – how to tackle challenges and how to use them to your advantage, including artificial intelligence.