Fintecture, the bank transfer payment solution


The open banking revolution calls for greater collaboration between market players

Europe's determination to move towards efficient payments is about to be demonstrated once again. The European Commission is speeding up the implementation of an ambitious program announced last June, timed to coincide with a tight electoral calendar (if possible before the European elections in 2024). It includes PSD3 and PSR (Payment Service Regulation). Technical access to payment infrastructures has been clarified. Instant transfers will, without too much suspense, be mandatory in Europe and free almost everywhere (all in a text of just ten pages!), with adoption by the end of the year. 


The challenge will be to anchor the announced revolution in everyday life and achieve the expected volumes. So far, the reforms have not met all the ambitions, which are certainly high and therefore require time to adapt.

From chaotic start to unprecedented consensus

The 1st Payment Services Directive (PSD1), adopted in 2007, put an end to the banking monopoly by granting a recognized status to payment institutions, with the aim of boosting competition and innovation in Europe. DPS2, in 2015, followed suit, obliging banks to expose their data via APIs to new regulated players, capable of accessing bank data (AIS) and orchestrating account-to-account payments (PIS), thus fostering the advent of open banking. Over the past 8 years, the road has been long, winding and not always paved with good intentions... but the situation today is quite different. Europe is preparing to vote on no less than 10 texts in 6 months in the field of payments: an unprecedented accumulation, testifying to an equally unprecedented consensus!

First of all, it's undeniable that the public authorities are now listening attentively to fintechs, who have proved that these market openings create value. It should be noted that these texts are not simply projects put off until the Greek calendar, but, for the most part, regulations for immediate application, set to come out "really" quickly, which is something of a miracle... or a new maturity.

In the space of 8 years, the fintech sector has become more structured, under the impetus of key organizations such as France Digitale, France Fintech, Finance Innovation and AFEPAME, enabling interests to be aligned and a stronger voice to be heard. Furthermore, banks, despite being caught up in contradictory injunctions, have been honing their APIs and witnessing the gradual take-up of instant transfers and payment initiation, offering seamless transfer payment paths, thus becoming accustomed to collaborating or even partnering with fintechs to offer these solutions to their customers. These accelerated regulatory changes reflect a market that is finding its modus operandi.

Behind the texts, the challenges of collaboration are still slow to materialize

However, there are still key issues to be addressed if these new regulations are to reach their full potential. Starting with the fight against fraud, which is not taking full advantage of collaboration between banks and fintechs. At Fintecture, we are investing heavily in technologies capable of complementing banking systems, which are still burdened by complex information systems that are costly to transform rapidly. It is therefore in everyone's interest, first and foremost that of the citizens subjected to these fraudulent attacks, to provide a framework for information sharing between regulated establishments. The new texts touch on this collaboration, but remain timid, complex and therefore limiting. 

The other challenge is for some banks to catch up technically. While the majority of banks have made significant progress, some are lagging behind, with APIs that are uneven, exclude business accounts or are even dysfunctional. The truth is, to guarantee reliable execution upon initiating a transfer, with clear payment statuses for a merchant, additional services need to be added. This is a situation that the regulator will have to adjust if it is not to penalize the growth of the market as a whole and the adoption of consumers, who are used to fluid digital services. 

In addition, Payment Service Providers (PSPs) will soon benefit from PSD3 and PSR (Payment Services Regulation). This new European regulation will clarify the liability regime between fintechs, banks and their customers, to the benefit of all. It's a safe bet that this precise framework of responsibilities will boost the performance of existing APIs under PSD2, as banks will be required to communicate information even more fluidly to regulated players such as fintechs.

Finally, a scheme (European contract) and two other key texts are currently being prepared. The first, to be introduced by the European Payments Council in 2023, concerns premium APIs, which will be fee-based functionalities added to existing APIs resulting from PSD2. They could enable other types of service (for example, the current SIP enables immediate or deferred credit transfers, but does not allow an amount to be pre-booked on an account, like a bank card imprint system). The others concernOpen Finance, which would extend access to payers' financial data to financial data not necessarily linked to payment accounts (savings accounts, for example). The aim is to offer solutions that are even more adapted to the market, and to improve the fight against fraud. Here again, significant progress could be made: PSPs will be able to collect customer data very quickly and automatically, with the customer's consent, and thus become key players in the credit market, able to respond almost instantaneously to financing needs. Furthermore, the regulation on the digital euro will enable the European Central Bank to create a new currency, which could be directly accessible to payment institutions.

Fanny Rodriguez

Regulatory shock in the country of payment

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