Building resilience to fraud and enhancing digital financial literacy with EU support in Latvia and Lithuania

Today marks the beginning of an ambitious project aimed at strengthening the digital financial literacy of the population of Latvia and Lithuania and its resilience to financial fraud. The project brings together the European Commission, the Organisation for Economic Co-operation and Development (OECD), Latvijas Banka, Lietuvos bankas, and other representatives of the financial and security sectors. The stakeholders will develop and implement effective solutions based on the results and recommendations of studies conducted by the OECD.

Ilze Posuma, Member of the Council of Latvijas Banka, opened the meeting by emphasising: "Since 2020, financial fraud has presented a significant challenge not only for the financial sector, but also for the people of Latvia. In search of ways to stop money fraud, we have implemented various activities and organised several public education campaigns. Yet, financial security has proved to be a considerable challenge. The low digital financial literacy of the population is also alarming; therefore, we greatly value the opportunity to implement this project together with world-class experts, representatives of the financial and security sectors in Latvia and Lithuania. Together, we will come up with a plan to contribute to resilience to fraud more effectively and to enhance the public's digital financial literacy."

Simonas Krėpšta, Board Member of Lietuvos bankas, emphasised: "Lithuania is the fintech hub of Europe with widespread provision of digital services. However, this title and a high degree of digitalisation is posing a new challenge that is financial fraud. We have been observing an ever-growing wave of financial fraud in various segments. Yet we believe that with a high level of collaboration between different institutions, vigilance from payment service providers and customers, and application of innovative solutions financial fraud can and will be contained. In this respect, Lietuvos bankas is drawing up a national action plan and regularly provides specific guidelines for market participants, especially payment service providers, and puts tremendous effort in enhancing financial literacy levels of the society. We are confident that this project for Latvia and Lithuania aiming to improve digital financial literacy and resilience against financial fraudsters will lead to the development of concrete, practical and, most importantly, effective solutions."

The project seeks to provide and implement an action plan that would encourage behaviours leading to increased financial security, sustainability, and well-being for the population of Latvia and Lithuania. Focus will be placed on educating the public on digital financial tools and enhance awareness of risks of fraud, with the objective of improving behaviours and habits to seamlessly weave this knowledge into everyday life.

Laura Rinaldi, Head of the Unit for Financial Sector and Access to Finance at the Directorate-General for Structural Reform Support of the European Commission, stressed the importance of this project: "It is a flagship initiative linked to top EU priorities, namely the Capital Market Union and the digital transition. While the digitalisation of finance can bring opportunities and growth, this requires specific understanding of risks and adjusting behaviour to ensure safe use. The European Commission also welcomes the cooperative and mutual learning approach chosen by Latvia and Lithuania to implement the project."

Antonio Gomes, Deputy Director of the OECD, highlighted: "According to the OECD/INFE 2023 International Survey of Adult Financial Literacy, 18% of adults in Latvia and 14% in Lithuania have fallen victim to financial fraud or scams within the two years prior to the survey. While several factors can be at play, these data highlight the need for better digital financial literacy. At the OECD, we look forward to working with Latvia and Lithuania to collect data and develop evidence-based action plans to improve digital financial literacy, ultimately aiming at empowering and protecting consumers in their financial decisions."

A quantitative survey on the digital financial literacy of adults will be launched under the project. The survey will delve deep into the digital financial knowledge, behaviours and attitudes of the Latvian and Lithuanian populations. Additionally, a qualitative study exploring the profiles of financial fraud victims, their experiences, and factors affecting fraud cases will be conducted for the first time in the Latvia and Lithuania. The data will be analysed by the OECD and will be used to develop an action plan.

The project is implemented by the OECD with support from the Technical Support Instrument (TSI) of the European Union that provides tailor-made technical expertise to EU Member States to design and implement reforms. The support offered by the TSI covers the whole reform process from preparation and design to practical implementation.

The project promises to greatly enhance the public's financial security and improve its ability to identify and prevent risks of fraud, thereby strengthening the financial well-being of both Latvian and Lithuanian populations.