EU regulators target antitrust practices ahead of PSD2 implementation
Lenders obstructing Fintechs’ legitimate access to customer information triggers unannounced bank inspections
Banking alert | 13 October 2017
The EU has been attempting to develop a more accommodating regulatory environment for innovative technology companies, encouraging them to join the financial sector. However, the European Commission believes banks are behaving in a ‘cartel-like manner’ by preventing non-bank owned providers from accessing customers’ account data.
Preparation for PSD2
Despite the fact that the new Payment Services Directive (PSD2) only enters into force in 2018, supervisory bodies are already targeting malpractices based on antitrust legislation. Fintech companies anticipate that the new regulation will help them challenge the dominance of traditional banks in payment and transaction services. Traditional banks, on the other hand, fear that customers will switch accounts more often in search for the best deals, thereby jeopardising profitability.
In exchange for the access to data of customers who authorise it, Fintech organisations will face stricter regulations regarding data protection. However, the new entrants to the market envisage scenarios where banks deliberately attempt to interfere with performance by, for example, delayed response to access requests. This would defeat the purpose of the regulator to create an ‘open banking’ environment.
By conducting the aforementioned unannounced inspections, the regulator has set the tone ahead of PSD2 implementation. They have made it clear that malpractices will not be tolerated and action will be taken where required.
How can we help?
It is crucial for both parties, Fintechs and traditional banks, to be prepared for the challenges posed by new regulation. Our team can assist in:
- Assessing and ensuring the robustness of your business model in an ever changing environment;
- Assessing the sustainability of your long term strategy in relation to new technologies;
- Assessing your readiness to comply with upcoming regulatory developments, including PSD2 as well as the General Data Protection Regulation (GDPR).