Global forecasts of the financial sector show that in the next three years the banking sector will experience rapid development compared to the last 30 years.
The Latvian banking sector is ready for this rapid growth and already adheres to the highest operational standards and provides modern and various financial services for the widest range of customers, both remotely and on-site.
The goal of the Association is to facilitate further development of the Latvian financial sector - by means of high value added and the availability of an innovative range of products able to compete in the single European Union market.
Strategic Development Committee
The Strategic Development Committee of the Association is engaged in development matters of the industry. Their task is:
- To create a joint vision regarding the development strategy of the financial services provided by the Latvian banking sector
- To facilitate a discussion regarding the role of the Latvian banking sector in the Latvian, regional and global value formation chain.
Main directions of operation of Association in the development field
Global Business Service Centers (GBSCs) – large, international business units in cities with a competitive business environment and an available talents that carry a wide range of business support functions, including Centers of Excellence run as Global In-house Centers (GICs), Shared Service Centers (SSCs), Business Process Outsourcing (BPO), Information Technology Outsourcing (ITO), etc. Finance Latvia GBSC members represent Centers of Excellence in finance and related sectors.
In the cities of neighboring countries such as Krakow, Prague, Warsaw, Vilnius, the global business services sector is already saturated. A favorable business environment, convenient geographic location, growing economy, good infrastructure, advanced air connectivity and high work ethics make Riga an attractive destination for potential investors of the GBSCs, especially to the business and excellence centers of the Nordic countries.
The range of GBSC’s business support functions is very diverse (finance, IT, logistics, data processing, procurement, etc.). Almost any professional with significant work experience or a recent university degree can find a relevant job and build a rewarding international career with remuneration above average for Latvia.
Experience of other cities with developed GBSCs shows that graduates and professionals often choose to work in the GBSCs. Development of this sector would also promote employment and provide valuable experience in further career development.
Joint public-private effort for the development and expansion of the GBSCs in Latvia in underway:
- Regular working group meetings with support from the Ministry of Economics, Investment and Development Agency of Latvia (LIAA), Riga City Council, Finance Latvia, Foreign Investors Council, National Alliance of Real Estate Developers and other industry representatives;
- On December 14, 2017, the first meeting of GBSC industry members organized by the Ministry of Economics was held, presenting the results of the GBSC survey on the main challenges and development perspectives of the sector;
- Memorandum of Cooperation on Development of the GBSC was signed in Riga on April 26, 2018; it involves targeted cooperation between public institutions, Riga City Council and the private sector on development, growth and job creation of GBSC sector.
- On April 18, 2019, The Association of Business Service Leaders in Latvia (ABSL) has been established. It is the leading organization representing the business services sector in Latvia.
New framework in Europe – Payment Service Directive (PSD2) and EiDAS Regulation gives the Latvian financial sector unprecedented opportunities to provide services in other European countries, as the single banking market of Europe is the second largest market in the world.
The Association believes that the introduction of the directive will open the payment service market for new players, provide opportunities for third parties and create new services in the financial sector.
For more rapid development on the European level, we see a need for a single EU framework for all service providers (same activity, same regulations), thus facilitating competitiveness and cross-border operation, as well as reducing market fragmentation. As a small country with a limited market, equal conditions mean an opportunity for Latvia to compete on a broader scale. The more regulations are introduced, the more similar the conditions, and the better it is for our companies. In the scope of the European Banking Federation, we differ from other countries with our openness and desire to use new financial technologies.
Activation of lending and increasing of loan portfolios by 10% in the next three years is one of the strategic operational objectives of the banks. Reaching this goal will be possible with the cooperation between all involved parties – companies, state authorities and banks. Cooperation with Altum is very important at this point, both in implementing the European Union structural fund programs, and using Altum support programs – for the insulation of multi-storey residential buildings, portfolio guarantees, guarantees for small and medium companies, and others.
In a similar manner to before, banks will continue issuing loans for Latvian business development and to households. One solution for increasing lending is a government support program that expands the range of the first residence purchase guarantee recipients to include not only families with children but also the new specialists.
Banks in Latvia make up an important part of the country’s economy as they handle payments, store the free funds of companies, and upon necessity the companies may receive loans from the banks. Thus, we see improvement of the business environment as one of the most important factors for the development of banking and other sectors of the Latvian economy.
- Designing and implementation of tax reform, including elimination of the shadow economy
- Introduction of framework for investment account
- Facilitation of cooperation with the State Revenue Service in improvement of the tax administration, account register and business environment and exchange of information
- Improvement of cooperation in Land Register matters with the improvement of registration processes and making mortgages more effective, to ensure that customers have convenient and safe solutions to the extent possible for receiving mortgages
- Improvement of insolvency framework
With its expertise, the Association is constantly participating in dialogue with the legislator and representatives of the executive branch for the formation of a better business environment.