17 October 2017
Bimal Melwani

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Bimal Melwani - Eurobits Technologies

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Why We Believe PSD2 Should be Better

09 May 2017  |  4587 views  |  4

In April this year the European Banking Authority released their final RTS draft for PSD2 to be presented to the European Parliament. 

Many European Fintech companies feel that the draft does not stay true to the principle of equal playing field that PSD2 was originally intended to provide. 

To make our voice heard, an association has been formed consisting of 65 European Fintech companies (and growing), and a manifesto presented, to ask the European Parliament to ensure the RTS be technically neutral and in line with agreed objectives and text of the final PSD2 agreement. 

We strongly believe that if some of the proposed standards are adopted, specifically those in relation to how Fintechs communicate with banks on behalf of the consumer, they will have a severe adverse impact. They will have a negative impact on competition in the European payment and financial services market, they will jeopardise consumer control over their own financial data as enshrined in GDPR, and they will hinder the future trajectory of innovation in Europe.

We believe the proposed regulatory standards are inconsistent with PSD2 and will make Fintechs technologically dependent on banks and therefore grant incumbents a gatekeeper role on the fintech sector.

We ask that the European Parliament stands firm on their position on PSD2 and the Regulatory Technical Standards are amended to ensure European consumers have real choice in payment and financial information services, allowing for the continued growth and innovation in e-commerce so that Europe remain the centre of global excellence in Fintech.

The full manifesto can be accessed via this link, 

https://images.sofort.com/future-of-european-fintech/assets/Manifesto-for-the-impact-of-PSD2-on-the-future-of-European-Fintech.pdf

The future of European Fintech is now in the hands of the EP. And to that end, such is the name of the association, 

http://futureofeuropeanfintech.eu/

 

 

TagsRisk & regulationFinancial inclusion

Comments: (7)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 10 May, 2017, 16:58

Copy-pasting a comment to a similar article:

Wrong move.

Innovative Fintechs Don’t Need No PSD2 Regulation

But, should the fintech coalition ignore my unsolicited advice and continue to push ahead, EBA should accede to its demand. Provided the coalition will let banks screen scrape their data. Fair is fair.

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Bimal Melwani
Bimal Melwani - Eurobits Technologies - Madrid | 16 May, 2017, 14:04

Ketharaman, I feel the article you reference (written by yourself) raises a variety of other points that is not relevant to the purpose of this blog post. Regardless of your opinion on the comercial value offering of PFM's, one of the premises of PSD2 is to level the playing field between Banks & Fintechs, and allow customers to have greater control over their financial data. A dedicated interface controlled by banks does not adhere to that principle. 

Thanks for commenting, 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 16 May, 2017, 16:21

@BimalMelwani: 

Sorry it was my intention to reference just the following passage in my blog post: http://lnr.li/Q6npt. I said wrong move on the part of fintechs because banks could equally well turn around and ask fintechs to share their customer data with banks.

Consumer's purchases on Amazon are proprietary to both consumer and Amazon. Consumer's plan with Vodafone are proprietary to both consumer and Vodafone. Likewise, consumer's financial transactions with a Bank are proprietary to both consumer and Bank. Why should only banks be compelled to share their proprietary with third-parties?  

The notion of level playing field works both ways. If fintechs want consumer-bank proprietary data, then they should mandated to share their consumer data with banks.

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Bimal Melwani
Bimal Melwani - Eurobits Technologies - Madrid | 16 May, 2017, 16:27

Ketharaman, I absolutly agree, not because it is fair to Banks or Fintechs but on the principle that the Consumer should be free to decide with whom they choose to share their information. After all they are the owners of the data!

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 16 May, 2017, 17:00

@BimalMelwani:

Notice I've said the data is proprietary to both consumer and service provider. I don't agree that consumers are sole owners of transaction data, whether with Amazon or Vodafone or Banks. Data belongs to both parties.

To take an example, consumer gets a CLO on their NetBanking portal. This data / info / whatev is generated by Bank. While it's produced by using consumer transaction history as raw material, the finished good itself is owned by Bank - just as a limestone quarry does not own the cement produced from the limestone supplied by it to the cement manufacturer. Scraping will allow fintech to gain access to what's a form of trade secret. Hence fintechs can't demand access via screen scraping.

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Bimal Melwani
Bimal Melwani - Eurobits Technologies - Madrid | 17 May, 2017, 09:13

Ketharaman,

In the example you have given, the end user has to authorise the Bank to use their data to receive CLO's. Studies show that most are agreeable as long as the offers are relevant. It is a win-win. But the end user should be able to choose if they wish to not receive it.

In the same fashion, if an end user chooses to provide their user credentials to a third party, and in exchange receive a solution s/he values, they should have the right to do so, but the TPP should be regulated by EU law, and the end users' rights should be protected. 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 17 May, 2017, 10:01

@BimalMelwani:

IMO, permission(s) is / are required for a bank to make a CLO to a customer is irrelevant in the current context. My point is "banking data" - taken as a monolithic entity - belongs jointly to customer and bank. Both parties have to agree to share that data with third parties. Customer's approval alone does not suffice.

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job title Intl Accounts Manager
location Madrid
member since 2017
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Pipeline management, Digital Strategist, PSD2, International Sales for Eurobits Account Aggregation Service

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