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European FinTech firms believe that banks are lobbying against EU legislation that could see the power balance shift, in a report from the Financial Times.
In the report, it discusses PSD2, which is the second payment-services directive that has been created to improve competition by getting banks to allow third parties, such as FinTech companies, to access the data of customers who sanction it.
In return, FinTech companies would face greater regulation, but the belief is that this would provide greater confidence to users in the reliability of the services.
However, the European Banking Authority (EBA) law, which is being finalized by regulators, is thought to give too much power to banks.
According to Sebastian Siemiatkowski, chief executive of Klarna, the Swedish online payments company, he said that:
If it gets passed in its current form, some banks will comply but some will have issues and others will not exactly be perfect.
Many European FinTechs are hoping that the law will change, which would open the possibility of an open-bank avenue, so that the data held by banks would subsequently help push financial technology companies into the mainstream.
FinTech to Reshape Banks
Banks want tighter restrictions on FinTech companies and their access to customer data for fear that cybercriminals will obtain the information. As a result of this, FinTech firms believe that banks will delay response times to access requests.
However, a recent report has found that the Bank of Korea sees financial technology firms playing a bigger role in shaping South Korea’s financial industry.
Yet, while this is one such case where FinTech is being embraced that’s not the case in other countries.
Just recently the Bundesbank President Jens Weidmann expressed his views that the sector needs greater regulatory oversight because of its potential to threaten financial stability and the banking sector. His views come after former Group CEO of Barclays, Antony Jenkins expressed last year that within the next ten years the financial technology sector would substantially disrupt traditional banking systems and the banking sector as a whole.
Mark Carney, the governor of the Bank of England, has said that while FinTech brings great promise it also brings great risk.
In a speech he presented last month, Carney said that as the risks emerge, government regulators need to maintain a strong focus on the regulatory perimeter, including a more disciplined management of operational and cyber risks.
However, he added that by enabling technologies and managing risks, governments can help create a new financial system for a new age.
Featured image from Shutterstock.