The Baltics’ strategic embrace of digital innovation has positioned the region at the forefront of Europe’s FinTech evolution. With a combined population of over 6 million, these countries have become a hub for startups and technological advancement, particularly in the realm of digital payments and open banking. The early adoption of the Single Euro Payments Area (SEPA) Instant Credit Transfer scheme in 2017 has further solidified their reputation as pioneers in real-time payments.

Open banking adoption in the Baltics

The introduction of open banking in the Baltic region in 2017, following the EU’s PSD2 directive, elicited mixed reactions across banks, businesses, regulators, and consumers. Banks initially met open banking with scepticism due to fears of increased competition and data security risks, but some soon recognised its potential for innovation and new revenue streams.

Businesses, particularly fintech startups, embraced open banking as an opportunity to develop novel financial services and enhance market competition. Regulators supported the initiative, viewing it as a catalyst for increased industry competition, innovation, and consumer protection. Meanwhile, consumer reception was cautious, with excitement for improved financial services balanced by concerns over data privacy.

Over time, the varied reception has shifted towards a more positive acknowledgment of open banking’s role in advancing financial services innovation and consumer choice in the Baltic states.

Let’s look into specific regions across the Baltics.

Open banking adoption in Estonia

Estonia’s reputation as a startup powerhouse is well-earned, with a notable concentration of tech unicorns. The country’s integration into the EU’s SEPA Instant platform in 2017 marked a significant step towards real-time digital payments. Despite this, adoption among Estonian banks and payment service providers (PSPs) has been moderate, with around 47% of institutions embracing SEPA Instant as of June 2022. This reflects a cautious yet growing interest in open banking technologies within the country.

Open banking adoption in Latvia

Similar to its Baltic neighbours, Latvia joined the SEPA Instant scheme in 2017. The adoption rate stands at a slightly higher 53%, indicating a more enthusiastic reception among Latvian banks and PSPs. The central bank’s support for 24/7 non-cash transfers has been a key driver in the uptake of instant payment services, providing a robust infrastructure for digital transactions.

Open banking adoption in Lithuania

Lithuania’s proactive stance towards non-bank financial services providers has been instrumental in advancing open banking. The Bank of Lithuania’s CENTROlink payment system offers an inclusive platform for banks and PSPs, with 100% of institutions now part of the SEPA Instant service. However, the overall adoption rate of 34% suggests that while the infrastructure is in place, actual utilisation of instant payments services could be improved.

Yapily’s Baltic Open Banking Coverage

Our open banking platform went live in the Baltics in May 2022, and we now support 16 banks and financial institutions across the country.

Explore the list of available institutions via Yapily’s open banking platform.

Future adoption of open banking in the Baltics

The future of open banking in the Baltics is poised for significant growth, fuelled by regulatory initiatives and a shift towards more digital-savvy consumer behaviours. The European Commission’s proposal to mandate 24/7 instant euro payment services at no additional cost could serve as a catalyst for broader adoption across the region. This move is aimed at overcoming one of the main barriers to the success of the SEPA Instant scheme.

The regulatory environment in the Baltics, particularly in Lithuania and Latvia, has evolved to facilitate easier access to the SEPA for payment institutions. Lithuania’s recent tightening of regulations and Latvia’s open arms to cryptocurrency companies signal a dynamic and adapting regulatory landscape. Estonia’s cautious yet steady approach continues to attract domestically founded FinTech firms, maintaining its status as a critical player in the region’s open banking ecosystem.

Key trends to watch:

• The adoption of Payment Initiation Services (PIS) in e-commerce is on the rise, with consumer demand for seamless payment experiences such as Apple and Google Pay increasing.
• The decline of traditional card payments in favour of Buy Now, Pay Later (BNPL) services and the importance of recurring payments highlight the evolving payment preferences in the region.
• Technological acquisitions, such as LHV Group’s purchase of Everypay, signify a consolidating market with potential for innovation and competition.

Our powerful API connecting across the Baltics

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Speak to our open banking experts to explore our platform and discover how we can help your business connect to the Baltics.