Over the past decade, investing has grown in popularity in Estonia and now Coop Pank is entering the market. At the same time, competition in the sector is intense — a point on which both the newcomer Coop and existing providers of investment services agree.

According to Elisabet Visnapuu, head of savings, investments and pensions at SEB, Estonia's investment services market has become significantly more diverse in recent years.

Competition is not limited to local providers. Estonia is part of a broader international investment environment in which local banks and investment firms operate alongside foreign fund managers and platforms whose products are easily accessible to Estonian retail investors.

"In many ways, we are similar to our southern neighbor Lithuania where the market is overheated with service providers. At the same time, we differ from Latvia where banks clearly dominate the market and fintechs have not yet gained as strong a foothold," Visnapuu said.

Nelli Janson, head of the investor community at LHV, noted that the growing popularity of investing is evident not only in the number of investors but also in the amounts being invested.

"Along with this, people's awareness of financial markets and investment opportunities has increased. At the same time, advances in technology and the rapid expansion of the fintech sector have brought a wide range of new solutions and providers to the market," Janson said.

Coop Pank has hired Sander Pikkel, who previously worked at LHV, to build up its investment business.

Pikkel, who has taken on the role of head of the investment services business line, said the bank sees clear long-term potential in the sector. Although interest among Estonians in growing their wealth has increased significantly, many still find investing complex or distant and are looking for a simple and reliable solution from their home bank.

"Customers have responded very well to Coop Pank's savings solutions and investing is the next step from there because building wealth requires taking on more risk," Pikkel said.

Estonian communication strength of local banks

Addressing the intense competition, Sander Pikkel said that Estonians still hold less financial assets than the European average.

"We see potential here to grow the number of new investors, but also to offer existing Coop Pank clients the opportunity to invest within their home bank. Until now, they have had to do so outside of Coop, at another bank or on an investment platform," he said.

According to Coop Pank, Estonian clients expect clear communication in their native language when investing, as well as an understanding of the local market and support in regulatory and tax matters.

"This is precisely where we see local banks and domestic service providers continuing to play a strong role compared with international platforms," Pikkel said.

Kadi Tõnismaa, head of investment services at Swedbank, noted that from the client's perspective, any competition is always welcome as it pushes all service providers to work harder on behalf of customers.

Whether a bank can offer investment services profitably depends heavily on scale, the size of its client base and how well it can deliver a comprehensive service, Tõnismaa said. For this reason, she added, it is difficult to precisely assess the chances of success for Coop as a new entrant, though from a banking perspective its initial target group is likely to be its existing customers.

"In our view, clients do not make decisions based solely on transaction fees. Equally important is the overall experience: how convenient, simple and reliable the platform is, how good the access is to different securities and markets, how transparent the pricing is and what kind of support is offered to both beginner and experienced investors," Tõnismaa explained.

Swedbank, which offers a comprehensive solution allowing clients to invest in a range of instruments — from investment funds to complex derivatives — sees this as its strength and considers its service competitively priced. In addition, the bank is the only provider on the market offering children the ability to invest independently from the age of seven with parental consent.

Price pressure bringing margins down

Nelli Janson of LHV said that the key factors for profitability are scale and efficiency, noting that although the sector's overall volumes have grown, increased competition and pricing pressure have led to shrinking margins.

"This means that those who succeed are primarily the ones capable of offering scalable, technology-based solutions," Janson explained. In her view, the market is not easy for a new entrant, but it is certainly not closed. On the one hand, customer expectations are high and competition is strong, on the other, growing interest in investing continues to support market expansion.

"LHV has been closely tied to investing since its early days. It is part of our DNA and LHV's goal is to continue to participate actively and successfully in this competition," Janson said, adding that the bank aims to provide increasingly better and more flexible solutions that evolve alongside the market and technology.

"In a way, this field is like the city of Riga — it is never truly finished because services and products can always be further developed and refined. This is especially true in today's environment where automation and digital solutions are rapidly gaining importance and continuously creating new opportunities for both clients and service providers," she added.

According to Elisabet Visnapuu, head of savings, investments and pensions at SEB, investment services are a long-term line of business where success depends on strategic planning, trust with clients and the ability to adapt to constantly changing markets and economic conditions.

"Developing these services requires significant investment in technology, compliance with regulatory requirements and financial advisory expertise. For a new provider, this means a high level of commitment and a clear market entry strategy, as well as the need for strong differentiation," Visnapuu said. She added that the market is increasingly moving toward automated solutions, which could open up investment opportunities for people who have not previously engaged with market dynamics.

"This reflects a broader shift in investment behavior, where simplicity and cost efficiency are increasingly valued," Visnapuu concluded.

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