An overview
The European market and why Swiss banks should open their systems to third parties.
In Switzerland, Parliament has not promoted the issue of open banking through regulatory measures. As Switzerland is neither a member of the EU nor of the European Economic Area, it is not legally obliged to transpose European directives into national law. This means that PSD2 is not directly applicable in Switzerland (more on this topic from a legal point of view). Nevertheless, Swiss financial institutions have made payments in euros and are bound by the SEPA agreement. In order to benefit from a cross-border payment infrastructure, Swiss financial institutions must prove to the European market that they are sufficiently regulated by Swiss national law.
Nevertheless, Swiss financial institutions cannot be forced by PSD2 to disclose customer data to third parties. The Swiss Bankers Association has currently positioned itself against the introduction of similar laws and is promoting market-based solutions instead. The Swiss Bankers Association maintains that the financial market in Switzerland is already functioning perfectly and cites this as an example of a successful partnership between companies, Fintechs and major banks that lead to the development of innovative solutions. In addition, they explain that a legal obligation forcing banks to open their data would lead to market distortions and thus be ineffective and harmful for the banks, leading to additional costs that would lead to an increase in costs. These are ultimately borne by the customer. Finally, they fear that the compulsion of banks to open their data would neglect bank-specific security measures, which could lead to significant security gaps.
The current scenario is based on the assumption that no regulation will force Swiss banks to open banking. Instead, it sees Open Banking as the development of the retail market, influenced by the following factors.
Swiss banks must follow suit. When European banks begin to open their data, Competition in the private customer business will intensify. New entrants such as Fintechs and so-called challenger banks will benefit from PSD2 as it allows them to offer to a wider range of customers.
The rise of new entrants can already be observed today with challenger banks such as Revolut, which offer free basic banking products and services and a seamless user experience.
As Open Banking evolves, so will the open banking business in Europe. The customer experience will be in focus and will continue to improve and customer satisfaction will increase.
Expectations of financial institutions will continue to rise. In order to remain competitive and retain customers, Swiss banks could open their systems to third parties, not because they are forced by some regulations, but because customers are increasingly demanding advanced banking services.