“Innovation imposes collaboration”
In a period of deep transformation of the financial services industry, Jacques Pütz, CEO of LUXHUB, advocates collaboration between banks and innovative startups. He tells us more about the first impacts of PSD2 on FinTechs and traditional players, and also gives us a glimpse of the financial industry of the future.
LUXHUB has been partnering with many financial institutions in the context of PSD2, building a bridge between Banks, E-money institutions and FinTechs. What is your view on the ecosystem post-September 14 th, 2019?
Let’s first start with the impact on the FinTechs. Some providers already successfully offered account aggregation or payment initiation services over the last years in several countries, notably in France, Germany and the Netherlands. Nevertheless, these providers were not always providing these services in a fully secured way. For instance, their screen scraping method required the end-clients to put their credentials at the providers’ disposal, usually in breach of their contractual obligations.
This is one of the reasons why the European legislator decided to legally frame such services and impose to institutions holding payment accounts to collaborate with these providers, through APIs, in a secure and standardized way. This collaboration obligation does not come alone. Strong Customer Authentication (SCA) also have to be implemented by banks to ensure a higher level of security in their relationship with the end-client. These SCA however represent a challenge for the already existing account aggregation providers who accessed all accounts data in the past, i.e. not only the payment account’s ones. The business model of these providers will thus also need to be adapted to the new regulatory framework.