Fintech and bank collaboration in Latvia – a key to industry development
Fintech is playing an increasingly important role in the development of the country’s financial sector, as well as in boosting export performance both in Latvia and elsewhere in the world. This was evidenced by the event organised by the Fintech Latvia Association on the 21st of May, which was dedicated to the cooperation between fintech companies and banks. The growth of the fintech sector in Latvia in recent years cannot be ignored, but at the same time the range of challenges and issues on the agenda has expanded and requires the involvement of different partners.
The event was opened by Roberts Idelsons, Chairman of the Supervisory Board of Magnetiq Bank and Chairman of the Board of Signet Bank. Also at the event, Stefano Azzalini, CEO of dPIXEL and Francesco Gavanna, representative of Fintech District Milan, shared their experience of creating a Fintech ecosystem in Milan During the event, F. Gavanna stressed that all parties involved – both classic players in the financial market, i.e. banks, and new ones, i.e. fintech solutions and companies – have much more to gain than to lose by working together, but that this requires regular, mutually initiated communication.
Managing Director of Fintech Latvia Association Tīna Lūse: “Financial technology is one of the few sectors of the economy that has seen an increase in the number of employees in recent years and has consistently paid higher salaries than other sectors. So, it is an area that makes a significant contribution to the national economy, and it is important to think about various initiatives to stimulate the sector. Although there is a national fintech strategy, which is a big step, this area is constantly evolving and what we are trying to do on our side is to strengthen the ecosystem by organising different events, both internationally and nationally. As we can see from the attendance at today’s event, this topic – cooperation between banks and fintech companies – is very topical and important for both parties involved. We cannot ignore the changes that the industry has undergone in recent years, and therefore it must be emphasised that it is the mutual cooperation between the companies in the industry, the players in the financial sector and the government partners, is the key factor that shapes and can continue to strengthen Latvia’s leadership in fintech in the future.”
The event took place at the premises of Magnetiq Bank, which has recently undergone a rebranding, becoming the first bank in Latvia to focus its activities on servicing fintech companies. Edgars Valmers, Member of the Board of Magnetiq Bank, says: “In the coming years, we plan to significantly expand the range of products offered by Magnetiq Bank, focusing on innovative digital solutions. This has become one of the most important sectors in Latvia and we can already see that our services are in demand not only in Latvia, but also in the Baltics. We believe that it is important to keep up with the times and offer services that match the often most innovative players in the market – the fintech segment.”
The second part of the event was a panel discussion focusing on fintech and banking cooperation. On behalf of the state partners, Aija Zitcere, Director of the Financial Market Policy Department of the Ministry of Finance, and Marine Krasovska, Head of the Fintech Supervision Department of the Bank of Latvia, stressed the importance of fostering healthy competition, which will benefit end-consumers. Last week’s acquisition of a banking licence by Indexo AS, as well as the rebranding and strategy change of Magnetiq Bank, are just the most recent examples of dynamic changes in the sector. It is also important to continue to work on the current legislation: MiCA and DORA regulation, etc. Ramona Miglāne, partner at Sorainen, stressed that so far in her experience she has only encountered a positive attitude of the Bank of Latvia as a regulator towards new market entrants, which is one of the biggest plus points for choosing Latvia as a location for their operations. Juris Grišins, founder of Capitalia, also stressed that overall, there are positive trends, but it will take more time to assess whether the cooperation between different fintech companies and banks is successful and where more work needs to be done.
Stanislavs Sinakovičs, Head of Business Development Department at Magnetiq Bank, emphasised that servicing fintech companies is very promising, but there are also challenges. There are rules that must be fulfilled, regardless of the development phase or creativity of the companies, for the banks to be able to verify their business models, company perspectives, etc. At the same time, the bank has seen the need to provide additional infrastructure for these companies to operate, so it plans to introduce and improve various additional services.