FinTech ecosystem effectiveness: Balancing competitiveness, profitability, innovation and resilience — The case of Latvia
Abstract
This paper examines Latvia’s FinTech ecosystem as a case of small-market adaptation to technology-driven change in the financial sector. It develops and applies an Ecosystem Effectiveness Model that connects enabling capacities (technological readiness, institutional collaboration, regulatory environment and market adoption) with outcome dimensions of competitiveness, profitability, innovation and resilience. The study draws on a bibliometric mapping of FinTech research and on micro-level evidence from the 2025 Bank of Latvia Innovation Survey, using principal component analysis, cluster analysis and logistic regression to profile ecosystem actors and their innovation behaviour. The results demonstrate that Latvia has achieved relatively high Application Programming Interface penetration, growing use of artificial intelligence (AI) in compliance and analytics, and structured FinTech– bank cooperation, supported by innovation-oriented regulation and access to payment infrastructure. At the same time, gaps in deep-tech scaling, venture capital availability, talent and international promotion could limit improvements in ecosystem performance. By situating Latvia’s experience within broader European FinTech dynamics, the paper demonstrates how small economies can design policy and governance arrangements to convert ‘secondgeneration disruptors’ (eg AI, tokenisation) into focused, resilient specialisation paths rather than scale-based competition. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Līga Peiseniece is dean of the BA School of Business and Finance (BA SBF) of the University of Latvia, Riga, Latvia, where she is also professor and a leading researcher. She previously served as Rector at BA SBF. She has extensive experience in higher education leadership, curriculum development and quality assurance. Her research focuses on human resource management, innovation management, digitalisation of work and organisational sustainability, with publications in international journals and participation in international research networks such as CRANET.
Andris Nātriņš is Vice-Dean at the BA SBF of the University of Latvia (UL) and a member of the UL Scientific Council. He has long-standing experience in the financial sector (eg as Chairman of the Board at JSC Latvijas Krajbanka) and in higher education management, having previously served as Vice-Rector for Research and Development at BA SBF. His research focuses on financial sector transformation, FinTech and digital finance, green and sustainable finance, competence development and strategic intelligence, with publications in international peer-reviewed journals and participation in national and international research and policy projects.
Jekaterina Kuzmina is Associate Professor at the BA SBF of the University of Latvia. She combines her academic work with industry practice as a financial market analyst and responsible investment specialist at CBL Asset Management, Riga, Latvia, and has previously worked as an investment analyst at AmberStone Group, Riga, Latvia. Her teaching and research focus on investment management, financial markets and sustainable/ESG (environmental, social and governance)-oriented investing, with a particular emphasis on linking theoretical approaches to portfolio management and capital market development with practical market experience.
Santa Purgaile was appointed Member of the Council of Latvijas Banka by the Saeima of the Republic of Latvia on June 9th, 2022 (as of 1st January, 2023). Santa Purgaile holds a master’s degree in international economics and business. Previously, Purgaile served as Corporate Business Director at AS Citadele Banka and Co-chair of Finance Latvia Association’s Credit Committee, and has also worked at AS SEB Banka. She served as Chairperson of the Financial and Capital Market Commission, Riga, Latvia, from 24th October, 2019 to 31st December, 2022. Currently, Purgaile is a member of the Supervisory Board of the European Central Bank and represents Latvia’s interests in the work of the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority. Previously, she was involved in the work of the Board of Supervisors of the European Banking Authority.
Atis Verdenhofs is a researcher and visiting lecturer at the BA SBF of the University of Latvia. His professional background includes more than 15 years of experience in risk management, business intelligence and data analytics at international financial and FinTech companies, including senior roles at 4finance, Robocash Group and Money for Finance. His research focuses on digital transformation in finance, FinTech development, big data and competency evolution in the financial sector.
Andris Fomins is associate professor and director of bachelor’s financial management information systems programme and business management doctoral programme at the SBF of the University of Latvia. He has more than 10 years of academic experience, including at BA School of Business and Finance, where he teaches courses such as banking environment analysis, banking financial services, securities markets and investment funds, bank management and risk management, financial markets and investment policy. Before joining academia, Fomins held several senior positions in the financial sector, including serving as Senior Project Manager of the state-owned Mortgage and Land Bank of Latvia and as a board member of SIA Hipolīzings, Riga, Latvia.
