At the beginning of 2020, the Financial and Capital Market Commission (FCMC) carried out a survey of participants of the Latvian financial and capital market in order to identify the scope of innovative financial technologies (FinTech). Overall, 188 market operators were invited to participate in the survey, of which 76 responded and of them 26 indicated that they were already applying innovative solutions in the provision of financial services, but 19 of respondents had set up a special team to implement and develop innovative solutions. 11 respondents pointed out that they were planning to start using innovative financial service solutions in 2020.
The survey conducted by FCMC shows that at present strong customer authentication solutions, development of application programming interface with a view to ensure an open banking platform, biometric data and big data are the innovations most commonly used by Latvian financial and capital market participants.
There are currently two innovations in Latvia’s financial and capital market: one of them results from the market regulatory framework (second payment service directive, present strong customer authentication, near-field communication (NFC), application programming interface (API)), while the other one is based on the own initiative of financial and capital market participants (artificial intelligence, biometric data, robo-advisor, machine learning etc.).
The analysis of individual market segments demonstrates that the largest share of market participants using FinTech solutions is made up of the credit institution segment. Nearly all banks participating in the survey have set up a team to develop or implement innovative financial technology solutions. On the other hand, the share of payment and electronic money institutions using innovative financial solutions is low despite support from the State and FCMC to the segment for the promotion of innovation.
Considering that 76 of the 188 market participants responded to the questionnaire, while around 60% of market participants had chosen not to respond, most likely they did not use innovative financial service solutions.
However, there is a positive trend that part of responding market participants who have not yet implemented innovative financial services, are planning to start the provision of services by applying FinTech solutions.
FCMC continues to support innovation developers through innovation support programmes to promote the application and sustainability of new financial services. More detailed information on support programmes is available in the section Innovation and FinTech on the FCMC’s website: https://www.fktk.lv/en/licensing/innovation-and-fintech/.