The positive momentum left by the Covid-19 pandemic is still very much felt in the FinTech industry, but the year 2022 has significantly impacted the Fintech environment on a local scale through geopolitical upheaval.
Modern technologies, or fintechs, are currently changing the way citizens receive banking services in Latvia as well. What will 2023 bring us?
Digitization continues apace
With the expansion of the range of remote services, the comprehensive digitization of products and services continued in 2022. This has led to people visiting bank branches less and less – this was particularly relevant during the pandemic, but this trend has developed over the past year. More and more organizations have also started offering opportunities to companies, which until now were only available to individuals. For example, banks allow small and medium-sized businesses to open an account remotely and thus receive other services. Meanwhile, the new generation is more appreciative of robot technology and various solutions that help find answers on their own, such as interactive assistants that lead to a solution without calling customer service specialists.
Secondly, various mobile payments have continued their winning march in 2022. Citadele’s observations show that the number of mobile payments made by the user with the help of the app has become even higher than the amount of payments made in the bank Internet. The imprint of mobile payments on our daily lives is getting stronger and is also increasingly practiced by legal entities.
A major trend that entered the market last year is the “buy now, pay later” solution. While this cannot be described as a major innovation, it does allow the buyer to think about their cash flow. Currently, the new generation thinks relatively less about credit cards, but willingly uses the “buy now, pay later” solution, which is somewhat similar to paying for goods and services in the form of a subscription.
Private payments from Russia and Belarus have been stopped
When Russia started a war in Ukraine, the Western world resorted to applying sanctions to limit the aggressor’s military capability. The sanctions regime affected the entire financial sector: new requirements were set that financial institutions had to comply with. If earlier with the sanctions we understood that we did not transfer money to certain people who were on the sanctions lists, now banks have to review almost all payments made to both Russia and Belarus. We also see that payments to individuals in these countries have stopped, at least in the banking sector, and have also become expensive and require lengthy checks.
Another thing that shook Western society – the situation in the field of information security has worsened. Latvia has experienced many cyber attacks, which have affected not only financial institutions, but also companies in various sectors. This means that part of the investments in the IT field have been directed not to new products, but to strengthening IT security and the continuity of the provision of services. We had to think about what happens if we suddenly lose power and how to ensure customers have access to the money. We have already seen in Ukraine that the first cyber attacks were aimed directly at the monetary system.
Service to citizens of Ukraine takes place both in person and remotely
Despite the fact that citizens are increasingly migrating to the digital environment to receive daily services, there are times when face-to-face consultations are still needed. This is most often applicable to situations where people are interested in specific services or transactions with a large amount of money, as well as long-term commitments.
Speaking of Latvia and the Baltic countries, it is clear that a new group of customers has entered our market – residents of Ukraine, who needed to ensure quick and convenient access to financial services. In addition to face-to-face service, the opportunity has been created to become a bank client remotely. However, we have noticed that branch service is important for Ukrainians, because they often have to solve various problem situations.
What can Latvian fintech expect in 2023?
The Latvian financial services industry presents different kinds of innovations every year. In general, we are very developed in this respect and can compete with large countries such as the United States, as well as large European countries. For example, if you pay with a payment ring instead of a card, you will surprise a seller in Spain, Greece or some other big country more than someone here in Latvia. This shows that we can expect some kind of innovation again this year. What will they be – last year’s trends indicate.
From February 1, financial service providers will offer the opportunity to use an electronic signature or mobile electronic signature in Latvia. This means that both the usability of electronic signatures and the number of users are likely to increase. Therefore, we will continue to move in the direction of digital development, which will provide an opportunity to offer and receive an even wider range of services and other activities remotely.
The digitization of payment cards has come a long way and we now live in an environment where you don’t always need a physical card to buy something. In 2023, this trend will only intensify.
As more and more customer activities are done digitally, banks can better personalize each customer’s experience. It refers to several directions, such as improving security and providing more engaging services. For example, this year, services related to savings and investments, as well as types and services that will help manage the budget and save for a safety cushion, will be very relevant for customers.
