A coalition of 60 financial technology companies (fintechs) across is stepping up opposition to new rules proposed by the European Banking Authority (EBA) that would ban direct access to customer data from online banking interfaces – dubbed ‘screen scarping’ – under the revised Payment Services Directive (PSD2).
The EBA proposal would enable banks to deny this type of direct access where they provide a back-door application programming interface (API) to share customer data with third party firms. Although PSD2 aims to encourage competition and innovation by opening up access to customer data, fintech firms believe the reforms will provide banks with the means to control what data is shared, putting new entrants at a disadvantage.
The 60 fintech coalition members believe that in addition to undermining competition, the proposed standards jeopardise consumer control over personal financial data and negatively impact on the future trajectory of innovation in Europe.
In a seven-page manifesto, they write: “If the regulatory technical standards (RTS) which are currently proposed by the EBA are adopted, they will have the potential to negatively impact our companies’ business models, reversing what has been achieved by fintech companies over the last years in Europe.
“The proposed standards are not only inconsistent with PSD2, but they will also force fintechs to become technologically dependent on banks, positioning the banks as gatekeepers of the fintech sector.”
The manifesto concludes by calling on policy makers “to align the RTS with the PSD2 text, so that it no longer forecloses specific technologies, such as Direct Access, and preserves technology neutrality and consumer choice in the payment space”.
Commenting on the latest development, Lu Zurawski, solutions practice head of consumer payments for Europe, the Middle East and Africa at global payments firm ACI Worldwide, writes: “This manifesto is a high-profile attempt by mature fintech businesses to protest against new rules by the EBA that would ban the practice of screen scraping of customer data from online banking interfaces.
“The fintech coalition argues that the EBA is wrong to think that screen-scraping techniques are not safe, secure and perfectly reasonable. This sharp assertion will generate lively debates and lobbying over the coming months before the PSD2 RTS are formally adopted by the European Commission (EC).
“It will be interesting to see this debate resolved. It’s hard to work out with whom to have more sympathy – with the banks who face the existential threat of new competitors getting easy access to their systems? Or with the fintech companies who face big costs of retooling if their screen scraping techniques – which they’d prefer to be known by the more cuddly term ‘direct access’ – become outlawed.
One can sense irony (and even a hint of schadenfreude), that the mature end of the fintech industry faces its own crisis unless it adopts the modern API-based techniques used by more recent competitors.
“It’s worth remembering that the PSD2 initiative has been created for consumers with the aim to simplify and secure the way we deal with our finances. But most of us still seem to value security above all. So perhaps the EBA has got the balance right in terms of encouraging a competitive financial services industry.”
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