FINTECH AND DIGITAL BANKING – PSD2 DIRECTIVE

FinTech companies specialized in digital transactions are popping up more and more and will continue so in the upcoming years especially with the application of the PSD2 directive. The directive is set to contribute digitalization of banking, however paying attention to certain rules especially security. Development of instant paying and better information for consumers will be the basis on which the service will develop.

Research from Pricewaterhouse and Coopers has shown 75% of FinTech companies are oriented to development of their own services and payments in cooperation with the banks, while the remaining 25% focuses exclusively on working with the banks. Those are probably the ones that already cooperate with the banks in regards of digitalization. PSD2 is probably one of the initiators of applied digital technology in banking in Europe. This can be seen in quality and modernization of services where when applying new digital solutions, especially in m-banking a large number of banks are cooperating with FinTech companies to keep up the with the competition.

It is considered that open banking, through this directive is letting non-financial players into payment service markets. Due to enhanced competition it is causing a price drop of fees, and the research of PwC has shown that lower transaction fees are the main motive for which one would change the service provider according to 65.48% respondents.

Gijs Boudewijn, President of the Payment Services Committee in European banking states that the main objective of the directive is to enhance the competitiveness of banks, increase security of services, client protection and facilitating innovations in this sector. Banks have, till now avoided giving information to third parties, but with the new rules they have to find a balance between security and developing new, simpler services for users.