The objectives set out in Latvia’s Fintech Strategy, approved by the government at the end of last year, to increase the number of fintech companies in Latvia by a third, create new jobs in the sector, attract new investments, and enable Latvia to become a competitive European fintech hub – are ambitious. Only with all participants in the fintech ecosystem playing their part can we achieve them.
During the implementation of the previous Fintech Strategy, Latvijas Banka devoted considerable effort to strengthening its areas of responsibility – licensing, regulation, and infrastructure. Our accomplishments are beginning to bear fruit: the number of licensed financial market participants is growing, while more and more payment service providers are choosing to use Latvijas Banka’s payment infrastructure.
Efficient licensing process and new market participants
In 2025, Latvijas Banka issued eight licences to companies in the fintech segment, and seven licences have already been issued this year.
It is particularly noteworthy that at the end of last year, Latvijas Banka issued the first two licences for the provision of crypto-asset services. Interest in obtaining authorisations for crypto-asset service provision remains strong, with several applications currently in the licensing and pre-licensing consultation stages. Companies from Poland, Lithuania, Spain, Germany, Turkey, Canada, and the United Kingdom, alongside other countries, have shown interest in obtaining licences for crypto-asset service provision. These developments indicate Latvia’s potential for attracting international crypto-asset service providers. A MONEYVAL report published in February, which rated Latvia’s anti-money laundering system very highly, has also encouraged international companies to seek licences in Latvia.
Both last year and this year, new payment and e-money institutions and crowdfunding service providers have joined the group of financial market participants supervised by Latvijas Banka. On top of this, an investment firm also received a licence in April. We expect the number of authorisations issued to increase even more this year. Currently, Latvijas Banka has 15 companies in the licensing stage and 29 companies in the pre-licensing consultation stage.
The entry of new market participants confirms that the support mechanisms and the structured licensing process of Latvijas Banka function effectively. These help to prepare companies for the requirements set for a regulated financial market participant and facilitate the smooth receipt of authorisations.
Another key development has been the multi-tiered support system established by Latvijas Banka which ensures that businesses receive the support needed at each stage of the company’s development.
The first step involves convenient and prompt consultations. At this stage, experts from Latvijas Banka answer questions regarding the regulation of the intended service or business model, explain supervision requirements, advise on the documents to be submitted, and outline the further cooperation path. Both Latvian and foreign businesses actively make use of these consultations: we provide approximately 100 free consultations per year, including to those just starting to explore the requirements of a regulated financial market.
The next step is crucial for businesses that have already decided to obtain authorisations in Latvia. We provide a free pre-licensing process – experts from Latvijas Banka conduct a detailed evaluation of the company’s business plan and documents submitted, highlighting any necessary improvements. This helps businesses improve the quality of the documents to be submitted for obtaining authorisations and understand supervision requirements. For detailed information on the required documents and applicable requirements, see Latvijas Banka’s website.
Successful cooperation during the pre-licensing stage helps businesses prepare high-quality documents necessary for obtaining authorisations. This ensures that the third stage – the licensing process – proceeds smoothly, enabling a company to receive an authorisation within two to three months of submitting all documents.
We have received positive feedback from foreign companies and their consultants when it comes to the structured and efficient licensing process. On top of that, they also value the possibility of submitting documents to Latvijas Banka in English highly.
Innovation-supporting payment infrastructure
A significant initiative implemented by Latvijas Banka to support the development of the fintech sector is the opportunity for non-bank payment service providers to join the Electronic Clearing System (EKS) of Latvijas Banka and execute SEPA payments. This service, offered by Latvijas Banka, attracts considerable interest. Currently, there are 13 participants in the EKS – 3 payment and electronic money institutions in Latvia and 10 institutions licensed in other European Union countries. Some non-bank participants in the EKS have already reached payment values and volumes comparable to those of smaller credit institutions.
The number of participants in the EKS is expected to continue to grow, as several non-bank service providers are currently preparing to join the system.
Latvijas Banka is also one of two euro area central banks offering the service of verifying the payee’s name to payment service providers, or the Instant Verification Service. This service is used not only by commercial banks but also by the central banks of 2 other euro area countries and by 10 non-bank payment service providers from across the euro area.
Financial sector regulation conducive to development
Innovation and financial sector regulation are often viewed as two irreconcilable areas. However, we understand the importance of innovation and, in collaboration with financial policymakers and industry associations, strive to create a regulatory framework that is conducive to innovation.
A good example is the inclusion, since January of this year, of the possibility in the Credit Institution Law to obtain a specialised credit institution licence with a lower initial capital threshold. This licence is suitable for so-called neobanks, which exclusively provide digital financial services or have a business model that envisages the provision of innovative financial services. The new opportunity will promote the development of innovative financial market participants and enhance competitiveness in the credit institution sector. Several financial companies have already expressed interest to Latvijas Banka in the possibility of obtaining a specialised credit institution licence.
Overall, Latvia’s financial sector regulation creates a secure and attractive environment for fintech development and provides financial companies licensed in Latvia with the opportunity to offer services throughout the European Union.
Each participant in the ecosystem has its own role
A broad development of Latvia’s fintech sector requires cooperation among all participants in the fintech ecosystem, as each participant has its own role. Lithuania has taken a similar approach, based on the view that a strong image and business environment are key to developing a competitive fintech sector. Contrary to common belief, obtaining a licence is a starting point, not the finish line. When choosing a country for business development, companies evaluate the country’s image and opportunities, as well as the quality of its business environment and competitiveness.
For potential market participants, Latvijas Banka provides support mechanisms and infrastructure, as well as an efficient licensing and supervision process. We have the capacity to license and supervise major fintech players. However, attracting them to Latvia requires strategically planned and purposefully implemented international marketing. Much remains to be done in this area, which is why the promotion of Latvia’s fintech sector abroad has been identified as one of the action lines in the new Fintech Strategy. The initiative is led by the Investment and Development Agency of Latvia, with any member of the ecosystem able to provide support. Latvijas Banka also invests resources by bringing industry representatives from the Baltic States and other European countries to fintech forums in Riga, as well as by regularly speaking at international fintech conferences and advising companies at various industry events on Latvijas Banka’s offering for fintech firms.
It is important to understand that quantity alone is not an end in itself if it adds no value to the economy and poses reputational risks for the financial sector. The goal of Latvijas Banka is to develop a high-quality and competitive fintech sector.
Author: Santa Purgaile, Deputy Governor of Latvijas Banka
Source: bank.lv
