Anti-money laundering (AML) reforms in Latvia are stopping businesses from opening accounts and licensed peer-to-peer lenders and other fintech firms are struggling to step in, Twino has warned.
The Latvia-based P2P lending platform said while regulatory changes have made the financial sector less vulnerable to crime, there are also fears that the safety requirements enforced on banks and their clients have created a “dead end.”
“One might think that such loopholes could be an opportunity for licensed fintech companies that provide the service of opening bank accounts,” Armands Broks, founder of Twino, said.
“But it’s not as easy as it sounds.
“Unlike Lithuania, where such intermediary bank accounts are opened by the central bank, in Latvia, this is done by commercial banks that aren’t always forthcoming to companies that they see as potential competitors.
“There have been promising fintech startups in the Latvian market trying to offer intermediary bank services, but their lifespan has been relatively short.”
Broks said none of the P2P lending companies operating in Latvia have bank accounts from the top three Latvian banks.
“At Twino we’ve also felt the reluctance of banks when it comes to opening accounts for fintech companies,” he added.
“Ironically, we can see a trend that banks are losing their customers to fintech companies anyway.
“Not only are individuals and businesses choosing international fintech apps and services to open their bank accounts, but they also increasingly prefer non-bank lending services.”
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