Luxembourg is preparing for the EU’s “open banking” rules, says Marc Hemmerling of the ABBL trade group. Pictured: Marc Hemmerling speaks at a fintech conference in February 2018. Photo credit: Maison Moderne
The EU’s second Payment Services Directive (PSD2), for example, could give a big boost to Europe’s fintech sector. PSD2 requires banks, with their clients’ approval, to open up customer data to third party companies.
So-called “open banking” is expected to increase competition, as other firms--big and small--will be able to provide investment, money management, mortgage, payment and other financial services to customers using the bank as a sort of platform. While the rules took effect in January, financial institutions have until September 2019 to implement the trickiest technical bits.
“spawn a wide range of activity--both from traditional institutions looking to partner with fintechs able to process and leverage their data and from fintechs able to use open banking to extend their value propositions.”
Indeed, a PwC and Strategy & survey of European consumers released in May found that 24% use financial apps from a third party provider and “40% of respondents prefer using non-banking financial apps as they provide a better user-friendly experience.”
A separate PwC study put out in June said the UK open banking sector could be worth “£2.3bn by the end of 2018” and £7.2bn by 2022.
The transition will not be easy. Marc Hemmerling of the Luxembourg Bankers’ Association (ABBL) stated at an event over the summer that “PSD2 is questioning the current role of the banks”.