New Banking Licence in Latvia Could Pave the Way for New Market Entrants

New banking licence in Latvia could pave the way for new market entrants

Amendments to the Credit Institutions Law, which entered into force on 6 January 2026, introduce a new category of financial market participant in Latvia — specialised credit institutions. According to information available to the Fintech Latvia Association, at least 3–4 market participants have already expressed interest in obtaining the licence, and consultations with the Bank of Latvia are underway.

Under the new licence, such institutions will be able to operate similarly to traditional banks, but with a lower initial capital requirement — at least €1 million (compared with €5 million for traditional banks) — and will be able to take deposits and operate across the European Union. Approximately 70 participants attended a discussion organised today by Fintech Latvia Association and BDO Latvia on the opportunities offered by the new framework, the Lithuanian experience of implementing a similar model, and its long-term impact on the sector.

“The new framework opens up new opportunities for Latvia’s financial technology companies. It allows them to expand their operations, diversify funding sources and, over time, move towards a full banking licence. At the same time, it can help address long-standing challenges in Latvia’s lending market by strengthening competition, improving access to finance and, over time, lowering borrowing costs. This could make Latvia more attractive for investment and strengthen the international competitiveness of local businesses. We want to see well-managed companies with strong export potential grow in Latvia and compete successfully on the global stage,” says Tīna Lūse, Managing Director of Fintech Latvia Association.

Specialised credit institutions will be able to provide a wide range of financial services — including taking deposits, issuing loans, providing leasing and payment services, as well as investment, crypto-asset and other financial services. The framework is primarily intended for digital, innovative or providers serving specific client segments. Although the capital requirement is lower, these institutions will be subject to supervisory, risk management and financial stability requirements similar to those applied to traditional banks.

According to industry observations, several market participants — including fintech companies, payment institutions and non-bank lenders — are assessing the possibility of applying for the licence.

“We are already seeing growing interest from companies in the fintech and non-bank lending sectors that are evaluating this opportunity. Businesses are particularly drawn to the ability to diversify funding sources through deposit-taking, as well as to expand their operations across the European Union,” says Inese Rendeniece, Head of Banking, Finance and FinTech Practice at BDO Latvia.

Lithuania’s experience shows that specialised bank licences can become a significant growth driver for the fintech sector. This regulatory framework has been in place there since 2017, and a number of fintech companies have successfully transitioned into licensed banks.

“Obtaining a specialised bank licence enhanced our business model — it enabled us to secure more sustainable and cost-efficient funding and expand our product offerings across multiple markets. Based on our experience, a similar framework could become a strong growth catalyst in Latvia if actively utilised by companies,” says Vytautas Naruševičius, Chief Financial Officer at Saldo Bank.

The introduction of the new framework in Latvia is intended to encourage the entry of new financial market participants, strengthen competition in lending, expand access to financing for businesses and households, and foster the development of digital and innovation-driven financial services.

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