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 ALCB 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 ALCB 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 ALCB in the development field
- Global business service centres
- Competitiveness in the single EU market
- Increasing of lending
- Improvement of the business environment
Global business service centres
The goal of the ALCB in the area of development is to facilitate further growth of the Latvian financial sector for it to form high value added and be able to provide a wide range of innovative products allowing for effective competing in the single EU market. A good example is the further involvement of Latvia in the provision of a global business service centres (GBSC) or shared services (SSC) and business process outsourcing (BPO).
Currently, SEB, Swedbank and DNB shared service centers are operating in Latvia in this segment, which in the scope of the group provide IT, payment, accounting, human resource management and other services.
In addition to the existing 6,000 - 8,000 jobs in this segment, estimates show that up to 10,000 new jobs could be created across Latvia, in Riga and other large cities. The banking sector therefore actively works in the area of developing GBSC services in Latvia, including having discussions with the Ministry of Economy, Investment and Development Agency of Latvia, Riga City Council and real estate developers. One of the planned steps is to sign a memorandum with the involved parties and together with the government develop an action plan to determine what steps need to be taken to facilitate the introduction of GBSC services in Latvia.
Some facts: GBSC development - what would society gain?
10 thousand new jobs in international companies in Riga:
- 85 - 95 million EUR in labour taxes
- 110 -120 million EUR worth of total annual income for the staff
- Jobs with an average salary of at least EUR 1,400 per month
- Motivation for students to stay in Latvia and for those who have left to return
Competitiveness in the single EU market
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 ALCB 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.
Increasing of lending
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.
Improvement of the business environment
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 ALCB is constantly participating in dialogue with the legislator and representatives of the executive branch for the formation of a better business environment.