FinTech developments are growing exponentially, in particular with respect to payment services. In the past few weeks, again, a large number of innovations with a focus on consumer user-friendliness have been announced. For example, soon we will be able to pay through a selfie or through voice or fingerprint. Several biometric payment methods are developed by Visa, Apple, Samsung and Google in collaboration with many specialised large and small FinTech companies. Payment through wearables, such as smart watches and fitness wristbands, and even through chips that are integrated in cars, will also be among the possibilities soon.
New FinTech companies mainly focus on activities that will give them a competitive advantage over banks as they do not require a full banking license; they can apply for either a license with less extensive requirements or a full exemption. As a result of many new FinTech companies having a focus on offering services to clients of banks, banks may lose their direct client contact, which makes it more difficult for them to sell clients their more profitable products (such as loans, insurances and mortgages). However, FinTech companies that offer payment services will also largely depend on these banks, as they maintain their clients’ bank accounts. FinTech companies will therefore often seek out collaboration with banks.
Furthermore, large technology companies, such as Google, Apple, Alibaba, Facebook and Amazon, the ‘BigTechs’, are well on their way to market payment and related services, and, in doing so, make their platforms more attractive and further increase the possibilities of data collection.
The question is what the competitive landscape will look like in a number of years. What will be the role of banks? What will be the effect of the Payment Services Directive 2 (hereafter: PSD2), in particular the right to gain access to accounts (XS2A)? How many FinTechs will prove to be viable? Will the payments industry be dominated by BigTechs? How will the security of payments be ensured? Which competition law aspects are expected to play a role and how will competition authorities engage with this?
Journal of Financial Law (tijdschrift voor Financieel Recht), Nr. 5 mei 2017.