EBA assesses impact of fintech on payments institutions and EMIs

This Report points out the EBAs key observations on PIs and EMIs strategies and business model changes, in particular focusing on the current trends and drivers, the different approaches to fintech, including their interaction with BigTech firms, and the level of implementation of innovative technologies.

Based on the EBAs observations, most PIs and EMIs are adapting their business models to cope with the competitive pressure and embrace PSD2 changes. Most institutions are keen to expand their products and services and enter new markets by (i) leveraging on cross-border services, (ii) requesting a licence to become a credit institution or third party provider (TPP), and/or (iii) embracing the new services provided under the PSD2.

While there is a slight trend towards internal development of products and services using fintech, without necessarily the involvement of external partners, a significant number of institutions partner with fintech firms and technology providers for the development of innovative products.

With BigTech firms posing a potential threat to the sustainability of PIs and EMIs business models, institutions are planning to focus on strengthening customer loyalty in a potential increased participation of BigTech firms. The outlook of the payments sector is quite positive in terms of revenues and profitability, with an overall expectation for increased customer base and new or revamped products, accompanied by an increase in internal fintech developments and IT spending.