Fintech companies are set to ramp up competition with their banking counterparts, buoyed by changes to existing EU financial legislation. The new laws would ultimately legitimise the business model of companies such as Bankin, a non-banking service that requires users to submit personal banking data to obtain its services.
This came in response as banks launched mass campaigns to discredit fintech companies citing the risk and unreliability of the platform. The app by Bankin, which relies on the information provided by its users to optimise its service, is seen as infringing on a territory long been exclusive to the banking sector only.
Joan Burkovic, one of the founders of Bankin said that fintech companies exist to collaborate with banks and elevate the collective user experience. Thus innovating online services and encouraging a level playing field by giving users the option of comparing the services provided by various banks. This Burkovic said, is a challenge in itself as banks consider this new inter-connectivity, a threat to its long impenetrable industry. According to Valdis Dombrovskis, vice-president of the European Commission, the new laws are however aimed at “opening up the payment market to new technologies and more competition”.
The update set to take effect in 2018 would allow Fintech companies to access user information easily with prior permission from the user. However this would also entail an increased scrutiny over these non banking services in terms of data protection hence encouraging the user’s confidence in the legitimacy and reliability of the service. All these however at a possible increase in cost to the bank’s own legal responsibilities or the compromise in security in itself.
All in all, La Zurowski, at ACI Worldwide, an electronic payments solutions provider would agree that many “are seeing it as an opportunity to experiment with innovative new services”.