Compliance Issues in Financial Services in Albania: A Growing Concern

Albania’s financial sector is plagued by compliance issues, threatening the stability and competitiveness of the banking industry. Despite efforts to promote competition, the regulatory framework remains inadequate, allowing for a lack of transparency and fairness.

Regulatory Challenges

The Banking Law requires banks to operate independently, yet the absence of effective regulation has led to a culture of non-compliance. The Competition Authority’s 20-year history has been marked by challenges in implementing competition policy in the banking sector. This is due to significant asymmetries regarding risk levels between customers and banks, making it difficult for consumers to choose the right financial products.

Measures to Promote Transparency and Competition

To address these concerns, the Bank of Albania has taken measures to promote transparency and competition:

• Financial education initiatives have been launched to inform the public about alternative financial services
• Price transparency has been improved through the disclosure of loan and deposit offers
• A credit registry has been established to share reliable information on borrowers’ quality among banks

The Importance of Collaboration

The collaboration between the Bank of Albania and the Competition Authority is crucial in promoting a pro-competitive regulatory environment. The licensing process for banking activity serves as a key instrument, regulating access to the market and ensuring that applicants do not infringe on free competition principles.

Impact of Consolidation and FinTech Emergence

In recent years, the banking sector has undergone significant consolidation, leading to an increase in market share for larger banks and improved financial performance. However, this trend has also raised concerns about the impact on smaller banks and the overall competitiveness of the market.

The emergence of FinTech companies presents new challenges and opportunities for the financial sector:

• New technologies have the potential to disrupt traditional banking services
• They can also improve operational efficiency and reduce costs

A collaborative approach between regulators and industry stakeholders is necessary to ensure a smooth transition.

Conclusion

Compliance issues in Albania’s financial services are a pressing concern that requires urgent attention. The Bank of Albania and the Competition Authority must work together to promote transparency, competition, and regulatory stability. Only through this collaborative effort can we create an efficient financial market that serves consumers and supports economic growth.