Page 9 - FintechAtlas2019

Albania
A fintech’s critical view on the
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local Open Banking progress
Will Open Banking drive the evolution of the payment system in Albania and create a competitive environment or will it continue to find limited acceptance on the market?
As Albania smoothes the path towards innovation and more startups emerge, the country’s banks are expanding their digital offering by adopting new virtual processes that will greatly benefit their customers. Ludovic Laventure from of MPAY, one of the finalists of the first edition of the RBI Elevator Lab, offers his perspective on Open Banking and explains why he regards it as an unorthodox reality for the Albanian market.
How do you see the efforts towards Open Banking in the local market?
Laventure: To speak the truth, rather than merely provide “any kind of answer”, I would be inclined to say that we still haven’t seen any real efforts towards introducing Open Banking to the local market. By definition, Open Banking requires banks to open their systems and offer other market stakeholders’ access to customer data and accounts. To date, a select few banks have made some efforts
in this regard. But even these initiatives can’t really be viewed as Open Banking because they are based on bilateral agreements between banks and other parties.
To what extent does your business model rely on such efforts bringing swift returns?
Laventure: We have a different approach because we started operating at a time when the business philosophy of Open Banking didn’t exist and, hence, banks weren’t inclined to collaborate. We develop B2B2C services, solutions that we offer to banks and
that allow them to reach their customers. To this end, we enter into individual commercial and technical agreements with partner banks and Open Banking isn’t essential to what we do.
How do you see the path towards fully embracing this model in the local financial sector?
Laventure: The path will be very long. Frankly, I only see the local financial sector embracing Open Banking if and when it is forced to do so by the law and regulatory bodies.
How is cooperation with the banks?
Laventure: Difficult. Bricks-and-mortar banks only move slowly and reluctantly. We have encountered two main issues with local banks. Firstly, innovation is not on their agenda. They neither recognise nor believe in it. Secondly, they are inflexible about adapting their technical infrastructure to provide access to customer data. Most banks have vendors and other providers who charge large sums for updating systems and creating APIs. The market is small and
it’s not easy for banks to scale up such investment. So they usually choose to maintain the service status quo rather than adapt. This is unfortunate.
As one of the stakeholders involved in consultation on the new regulation from the Bank of Albania that transposes PSD2 into a local law and directives, how do you find the new developments?
Laventure: As a piece of legislation, PSD2 has created many challenges for Europe’s banks. Implementation has proved
difficult, even in markets that are more advanced commercially
and technically. It is still incomplete. We expect the situation in Albania to develop in a similar way. The challenges for banks will be huge, in both technical and financial terms, and implementation will take a long time. Banks may need to upgrade their core banking systems before they can build APIs that will expose data as required by Open Banking. From a commercial perspective, banks will have to transform their mindsets before they are willing to reveal customer data to third parties.
This sounds tough. What does the Albanian banks’ attitude look like?
Laventure: Open Banking remains a very unorthodox reality for this market. But banks will need to move because they have no choice. ‘GAFA’ and neo-banks are already knocking at the door, offering innovative and easy banking and payment solutions. It is this, rather than the transposition of PSD2, that will force banks to act. Of course it’s very important to have a regulatory and legal structure that creates and maintains a level playing field. In any sector it is innovation and ideas, rather than regulations, which cause disruption. But regulations are necessary in order to maintain market equilibrium and enable all players to play. We believe
that the transposition of PSD2 into Albanian law will be highly beneficial in this regard.
Country data
Population 2019 (M)
GDP total 2019 (€ Bn)
GDP per capita 2019 (€, at PPP)
GDP growth 2019 (% yoy)
GDP growth 2020 (% yoy)
Official currency
2.8
13.7
12,700
2.2
-4
ALL
Total bank assets 2019 (€ Bn) 12 Total bank assets (% of GDP) 88 Account ownership 2020 (% of population) 45 Debit card ownership 2020 (% of population) 32 Internet usage 2018/2019 (% of population) 71 Usage of internet to pay bills 2020 (% of population) 30 Sent/received digital payments 2020 (% of population) 45 Source: national sources, ECB, ITU, World Bank, RBI/Raiffeisen RESEARCH; estimates for 2020 penetration ratios
Source: IMF, ITU, World Bank, RBI/Raiffeisen RESEARCH, data for 2019 and estimates for GDP growth 2020