On Thursday, February 4th in Zurich the Association hosted an engaging meetup focused on the second iteration of Directive on Payment Services (PSD2), the EU regulation poised to reshape the relationship between banks and fintech companies.PSD2 has been attracting quite a lot of attention since being passed by the EU Parliament late last year. Despite all the talk, it is not always clear what PSD2 actually is or, more importantly, how it will impact the banking in Switzerland. The event saw 40 members and guests take part in a fascinating discussion about the implications of PSD2 for both established banks, FinTech startups, and Switzerland.
Where does Switzerland stand regarding PSD2?
Switzerland is outside of EU regulatory jurisdiction but it is hard to ignore the implications of PSD2 which aims to open up access to banks for FinTech providers and increase the pace of innovation. FINMA has no plans to enforce PSD2, given it is an EU regulation. Therefore, barring the introduction of a similar development from the Swiss government, it is up to the Swiss banks to determine if and how PSD2 will be adopted in Switzerland. Accordingly, Swiss banks are currently debating how to handle the regulation within the Payments Committee led by SIX Group. Martin Hess of Wenger & Vieli is a key advisor in the process of adopting PSD2 in Switzerland.
What will happen if Switzerland does not join PSD2?
Switzerland has adopted a number of foreign payment regulations voluntarily in recent years (e.g. SEPA and PSD). Should it not adopt PSD2, it would break this precedent and create a gap versus EU payment system. As Douwe Lycklama of Innopay highlighted, PSD2 is aimed at increasing the pace of innovation in EU payments services, therefore, should Switzerland not adopt it, it risks falling behind the EU system in terms of innovative new solutions.
Where do Swiss players see the opportunities in PSD2?
Christian Bucheli, Head of Strategic Ventures for SIX Payment Services cited a number of concrete opportunities for Swiss banks:
- Growing number of ACH transactions should reduce card based fees and increase control over general cost structure
- Banks information and services become even more central to consumers
- Diversification into information services allows banks to diversify business models
- New revenue models for Banks and Processors
- Federated ID management systems like in Nordics become possible
However, he also highlighted a number of potential threats:
- Potential disintermediation due to TPPs (third party payment providers)
- Bank’s services can become commoditized and exchangeable
- Increased difficult to master security challenges due to multiple parties involved
- Large players like Apple or Google could start bypassing Card Industry
- Unreliable or inconsistent TPPs can backlash on banks customer relationship
Douwe Lycklama is founding partner of Innopay. Douwe is one of the thought leaders in ‘networked services’ like e-payments, e-invoicing, e-identity, m-payments, cards and SEPA, shaping breakthrough business and market innovations, standards and schemes. Innopay works for major international financial institutions and corporates, developing products, businesses and strategies. Innopay is member of EPCA, EBA and ECP/EPN. Innopay presentation available here.
Christian Bucheli is Head of Strategy and an Executive Director at SIX Payment Services. In this role he is in charge of Division Payment Services Strategy and all strategic initiatives including M&A as well as alliances on an international basis. SIX presentation available here.
Daniel Gradenegger is Co-Founder and Chief Business Development Officer at MUUME. MUUME is a commerce and multi-channel payment solution, which has been developed to offer the fastest possible liquidity to sellers and to make payments as easy as possible for their customers. The company was founded in 2013 in Switzerland and consists of an experienced team of more than 80 experts and developers. Muume presentation available here.