Despite the recommendations of the AdC, the market entry barriers for “fintech” companies remain

Financial services technologies, known as fintech, continue to have difficulties in gaining access to the national market. The incumbent, traditional banks, are still failing to adhere to much of the AdC’s 2018 recommendations, preventing “consumers from realizing the benefits of innovation and competition in this sector for consumers,” according to the company Company, in a statement released this Monday.

In a survey on compliance with the recommendations, the AdC found that “despite some progress, barriers to the development of competition and innovation in the financial sector persist” and that most of the proposed measures will be fully implemented “still pending”.

The same conclusions come from a survey the company carried out at Fintech in Portugal: “The conclusions of the sector inquiry are particularly strong, given that of the 70 companies providing services in Portugal, 74% responded that there are barriers to entry the market, “and in this universe,” 64% denote obstacles to the position of incumbents or the existence of a closed ecosystem, “the statement said.

“A demanding, uncertain or unclear legal framework, along with the small size of the market, is one of the main barriers to entry that companies face,” he adds.

Regarding the 2018 recommendations, the companies surveyed indicate that “some of the most important ones, such as removing barriers to access to banking information and infrastructure (SICOI), are not being implemented”.

As examples of difficulties, they give, among other things, the time taken to answer access requests, the approval requirements in addition to the required ones.

The criticism of the President of the Competition Authority (AdC), Margarida Matos Rosa, of the actions of the banks and their supervisory authorities is not new. In October 2020, at the Assembly of the Republic (AR), he argued that the Banco de Portugal should remove barriers to the entry of new payment service providers that compete with SIBS, the company that manages the Multibanco network and owned by the five big banks.

“It does not seem acceptable” for competition in the payment services sector to be left with “behavioral or regulatory barriers” that “run counter to the spirit of the internal market” and limit consumer access to innovative “other options,” said the regulator, Belonging to the Budget and Finance Commission (COF).

Noting that SIBS is “practically monopoly” and therefore the merger with Unicre has not been approved.

“With regard to access to SICOI, some companies explicitly mentioned the slowness of banks’ response to requests for representation, the slow deadlines for implementing access and the fear that banks are hindering access due to the conflict of interest associated with the activity as a unit that your competitors depend on for access to essential information, ”the statement said.

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