On 8 July 2019, the European Banking Authority (EBA) published a thematic report on the impact of FinTech on payment institutions’ (PIs) and electronic money institutions’ (EMIs) business models.
Key points in the report include:
- the payments landscape in the EU is undergoing significant transformation due to the introduction of the revised Payment Services Directive (PSD2) and ongoing FinTech developments;
- to the medium to long term, a number of factors will define the transformation of PIs’ and EMIs’ business models: (i) the progress of open banking and application programming interfaces (APIs), facilitated partially by the PSD2; (ii) the level of implementation of innovative technologies; and (iii) the activity of BigTech firms in the financial service sectors;
- PIs and EMIs appear to be investing significantly in the development of APIs in light of the September 2019 ‘live’ date, and in digital / mobile wallets as they foresee potential opportunities to offer augmented services to their customers;
- most PIs and EMIs are keen to expand their products and services and enter new markets by: (i) leveraging on cross-border services; (ii) requesting a licence to become a credit institution or third party provider; and/or (iii) embracing the new services provided under PSD2;
- a significant number of PIs and EMIs are partnering with FinTech firms and technology providers for the development of innovative products; and
- to counter the potential threat of BigTech firms, PIs and EMIs are planning to focus on strengthening customer loyalty.