Today, we have the pleasure of interviewing Sanita Zitmane, who is responsible for TWINO’s Latvian operations. The company has been operating successfully and issuing loans in the Latvian market since 2009; from 2019, the company has also been offering SME (small and medium-sized enterprise) lending products.

After long-term experience in the insurance industry and prior to joining TWINO, Sanita was Citadele Bank’s Product Manager in the Retail Product Development Department. Sanita’s analytical skills and extensive knowledge of business strategy and customer insight make her an influential leader at TWINO’s Latvian branch, operating under the Moneza and Moneza Bizness brands.

In this interview, Sanita shares her observations about the scene in the Latvian lending market – how it fared in 2020, what has changed since the start of the pandemic, and what the plans and priorities are for TWINO’s Latvian operations this year.

Caution from all industry players

Sanita reveals that the pandemic has naturally left an impact on the credit rating of both individuals and companies in Latvia. At the end of 2020, more than a third of Latvian businesses had a reduced credit rating, and 21.9% were late repaying their loans, which is quite a significant warning.

Despite these trends, Moneza SME products have increased by 16% in 2020 compared to 2019, while consumer products experienced a slight reduction in the number of issued loans.

We can see that the lending market is still continuing to adjust to the new situation. The industry has tightened its standards, becoming more choosy about its borrowers. In the meantime, market players are looking for ways to expand their businesses by exploring diverse loan opportunities – such as loan consolidation services, credit lines etc. We also see that borrowers have become more cautious. The average loan amount has decreased, indicating that borrowers are assessing their need for a loan more carefully”, Sanita says.

The state of the online lending market

Overall, the volume of online lending in Latvia has been decreasing since 2013. This has led to a situation where major industry players have had to continually adapt to evolve in difficult conditions. While the strongest market players have adapted relatively well to market changes triggered by the pandemic and unfavorable changes to legislation, data from 2020 still indicate that:

  1. The Covid-19 pandemic has caused a reduction in first-time loans issued to consumers by 39.60% compared to 2019.
  2. Due to the changes in legislation and a considerable increase in the cost of credit licensing, the number of online lenders in Latvia has reduced by 17.39%.

A “loan supermarket” in the pipeline

Since its inception, Moneza has become one of the top brands in the fintech sector with a wide product range for consumers and SME’s, with the company continuing to work on innovations and automation initiatives. Sanita tells us:

Getting the borrower’s experience right has never been more important. Moneza has reacted to the market situation and introduced an alternative client identification method, using the Smart-ID application. This has proven to be a successful approach and is actively used by our clients.”

She reveals that the company regularly reviews its progress, identifies how it can make the most of its market position, and decides where to take its business next.

As for the current performance of TWINO’s Latvian entity, we are actively improving the product’s economy and closely monitoring portfolio quality indicators to ensure long-term development, business sustainability, and growth,” Sanita explains.

The company’s specific strategic plans and priorities for 2021 are:

  • To strengthen the product, brand, and sales, and to grow the portfolio, aiming to become a top 5 non-bank lender (by portfolio size).
  • To become a “loan supermarket” for business clients with a broader target segment, while still keeping portfolio quality high.

Our goal is to become the leading provider of alternative financial services in Latvia in the small and medium-sized enterprises segment by 2024. Small enterprises play a very important role in the growth of Latvian business development. However, in recent years, it has become increasingly difficult for companies to qualify for a loan in the banking sector. The rapid and dynamic pace of business requires quick decision-making when attracting financing, which the current banking sector is unable to provide, so we see good potential for becoming a leading player in this segment”, Sanita shares.

At the beginning of April, Moneza launched a new product for business segment clients – reverse factoring. Reverse factoring is a type of financing that helps a company to pay invoices for goods or services issued by a supplier – the factoring agreement is concluded for a specific invoice or invoices.

Reverse factoring has only entered Latvia relatively recently but is a very common type of financing for entrepreneurs in Western European countries. With the help of reverse factoring, SMEs can pay bills faster and without delay. This can help in obtaining better purchase conditions, in purchasing the goods necessary for the development of the business in larger quantities, and in maintaining a stable financial flow.

TWINO is also continuing to expand its services to private individuals. With respect to the consumer segment, Moneza recently launched a credit line – a convenient product for individuals, where the borrower has to repay only the borrowed amount of the loan, while interest is paid only for the amount used.

Turbulent times provide valuable lessons — a saying that could be applied to TWINO Latvia and the whole Latvian fintech scene. Now, we have a better idea of how borrowers and other industry players react to crises, and this type of experience only makes us stronger.

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