The European Union forces banks to open their customer interface to third-party providers starting next year. Swiss banking doesn’t intend to follow suit.

The payment services directive 2 of the European Union promises to become a landmark decision: starting next year, banks in the EU will have to open their customer interface to third-party providers of services, including fintechs.

PSD2 is highly controversial because external service providers may in theory access information about bank clients. The proponents claim by contrast that customers will profit from the rule through the best available service and the most innovative products.

In Switzerland, Hypothekarbank Lenzburg and Postfinance proclaimed to be open toward an adoption of the EU rule on open banking. Most rivals however remained highly skeptical.

Reasons for Rejection

The Swiss Bankers Association lent its voice to the majority and published its view about PSD2. The industry group gave following reasons for its rejection:

  • No need for action: Swiss banks already offer a wide range of innovative solutions. Forcing the industry to open their interfaces will lead to a competitive distortion to the disadvantage of banks.
  • PSD2 won’t primarily help startups, but mainly global tech giants. They would get almost unfettered access to customer data – a dangerous development that opens for new security breaches.
  • Banks are facing extra costs in relation to security and compliance, which customers would have to come up for.

The association also said that the new regulatory framework still contained unresolved issues, with data collection as the main question mark. The commission of the EU was at loggerheads with the European Banking Authority (EBA) about the use of so-called screen scraping.

Risky Experiment

While the commission wants to allow the so-called screen scraping, EBA intends to introduce a separate interface with strong client authentication measures. The solution won’t however be ready before May 2019.

The Swiss bankers also believe that PSD2 is an economic experiment with substantial risks. If payment service providers for instance got full access to electronic account data, they would be able to see all accounts and deposits of clients.