Taking into account that in the last 10 years, the number of face-to-face customer service points of banks in Latvia has decreased the fastest among the eurozone countries, the aim of this initiative is to maintain a balance between the digitalization of financial services and face-to-face support for those Latvian residents and entrepreneurs in regions that still need face-to-face services, but the distance to the place of service provision is too large, so their availability is difficult, according to the central bank.
The President of the Bank of Latvia, Mārtiņš Kazāks, explains that this decision will ensure better access to financial services in the regions.
Kazaks emphasizes that this is very important, because banks have digitalized faster than citizens and companies, creating a gap between banks and their customers. With this decision, the Bank of Latvia corrects it, because good access to financial services is one of the cornerstones of economic growth.
The Bank of Latvia informs that at the end of 2013, banks in Latvia had 319 customer service points, while in October 2024 – 69.
Also, the central bank notes that a significant part of Latvian residents and businessmen are not satisfied with the availability of face-to-face services and consultations. Digitization requires standardized solutions, which in many cases are not suitable for citizens and entrepreneurs.
According to the data of the survey of Latvian companies conducted by the market research company “Rait” in the summer of 2024, on the order of the Bank of Latvia, 28% of entrepreneurs believe that banks work in a standardized and bureaucratic manner, without taking into account the specific needs of companies. At the same time, 12% of entrepreneurs state that the lack of branches and face-to-face consultations reduces the possibility of creating mutually beneficial cooperation, while 34% of residents are not satisfied with the availability of branches.
The changes initiated by the Bank of Latvia will promote the provision of financial services in a form that will promote the financial inclusion of all groups of society and the availability of financial services. The new requirements envisage establishing requirements for banks to provide face-to-face services.
This regulation will apply to those banks whose activities are oriented towards providing a wide range of services to the public and which are also planned to be designated as responsible for the provision of ATM infrastructure. In the current market situation, they are the four largest credit institutions in Latvia, namely “Swedbank”, “SEB banka”, banka ”Citadele” and the Latvian branch of ”Luminor Bank”.
The regulations of the Bank of Latvia stipulate that face-to-face services must be permanently provided in the centers of national cities and the largest regions (with at least 25,000 inhabitants), if the specific bank has at least 20% of customers from the population of the national city or region, and there is no permanent customer service location within the nearest 40 kilometers.
In the centers of other counties, banks must ensure a presence, but not a completely permanent customer service point, where customers must be served at their request.
The Bank of Latvia believes that the presence of credit institutions in the regions is ensured flexibly and rationally, so credit institutions have the opportunity to request the application of exceptions if, for example, they prove that the majority of customers in the given region are digitally active.
It is also planned to regularly review the rules and their practical application, clarifying the criteria and conditions if necessary. Banks will have the freedom of choice regarding the most appropriate way of organizing service provision, therefore it is predicted that their ability to form successful cooperation with local governments could also be of significant practical importance, notes the Bank of Latvia.
On Friday, November 29, representatives of the Bank of Latvia will meet with the Latvian Association of Local Governments to explain the purpose and nature of these regulations to local governments.
Latvijas Banka emphasizes that there will be no return to the past, when a branch of a bank operated five days a week in every small town. Many citizens use financial services digitally and will not change their habits, so it is necessary to look for rational and flexible solutions that are designed specifically for today’s situation and have reasonable and justified costs.
The Bank of Latvia will collect and publish information on the banks’ regional presence on its website.
Banks will have to meet the requirements contained in the regulations from January 1, 2026.
How can banks effectively balance digitalization with personalized customer service to meet the needs of all consumers?
Interview between Time.news Editor and Banking Expert
Editor: Welcome to Time.news, and thank you for joining us today. We’re diving into an important shift happening in Latvia’s banking landscape. With a rapid decrease in face-to-face customer service points in the last ten years, the Bank of Latvia is stepping in to address this gap. Joining us is Dr. Laura Rudzıte, a banking and finance expert. Laura, thank you for being here!
Laura: Thank you for having me! It’s a pleasure to discuss such a critical topic.
Editor: Let’s get straight to it. The data indicates that the number of customer service points in Latvia has plummeted from 319 in 2013 to just 69 by October 2024. As an expert, how significant is this decline for consumers, especially in rural areas?
Laura: It’s a huge concern. This decline has created a digital divide; many residents, particularly in remote areas, are left without adequate banking services. Digitalization is essential, but it shouldn’t come at the cost of accessibility. The lack of face-to-face interaction can hinder customer service and support, especially for those who may not be tech-savvy.
Editor: Absolutely. The President of the Bank of Latvia, Mārtiņš Kazāks, mentioned that this decision to stabilize financial service access is essential for economic growth. Why do you think face-to-face banking is still crucial for a segment of the population?
Laura: First and foremost, trust. Many people feel more comfortable discussing their financial matters in person. It builds trust between the bank and the customer. Moreover, certain financial products and services often require detailed explanations or personalized advice, which is challenging to convey through a screen. Kazāks is right; we need to close this gap for the sustained economic development of society.
Editor: The survey by Rait revealed that a significant portion of entrepreneurs feel banks operate in a standardized, bureaucratic manner, without fully accommodating specific needs. How can banks balance their digital strategies with personalized customer service?
Laura: It’s about finding that sweet spot between efficiency and personal touch. Banks can utilize customer data to inform their digital platforms while simultaneously investing in training staff at their physical locations. They can create hybrid models where routine transactions can be handled online, but complex queries can still be addressed face-to-face.
Editor: The new regulations by the Bank of Latvia require face-to-face services in certain regional centers. What do you see as the potential challenges and benefits of this move?
Laura: One challenge will be ensuring that banks adhere to these requirements consistently. It could also stretch their resources thin, particularly in regions with smaller populations. However, the benefits are significant. This initiative can enhance financial inclusion, allowing all residents—especially those in underserved regions—better access to banking services. It promotes local economic growth by ensuring that all groups can interact with financial institutions effectively.
Editor: That makes sense. Additionally, you mentioned that banks could request exceptions if their customer base is predominantly digitally active. Do you believe this stipulation might undermine the intended goals of these regulations?
Laura: It could potentially create loopholes. If banks misuse that provision to limit face-to-face interactions, it could harm those who genuinely need in-person help. Regular monitoring and transparent criteria for granting exceptions will be critical in making sure the regulations fulfill their intended purpose.
Editor: what would you recommend for the residents and entrepreneurs who feel the pinch of this evolving banking environment?
Laura: I think it’s crucial for them to voice their challenges directly to their banks. Engaging in dialogue can provide valuable feedback to institutions. Additionally, they should leverage any local services available, and perhaps advocate for community-based banking solutions that prioritize accessibility.
Editor: Thank you so much, Dr. Rudzīte, for your insights on this vital matter. It’s clear that while digitalization is essential, so is maintaining the human element in banking.
Laura: Thank you! It’s been great discussing this topic, and I hope for positive developments for all Latvians in the future.
Editor: And thank you to our audience for tuning in. Let’s continue to monitor these developments closely. Until next time!