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The Impact of Fintech on Payment Institutions’ and E-Money Institutions’ business models

The European Banking Association (EBA) has published a report titled “The Impact of Fintech on Payment Institutions’ and E-Money Institutions’ business models” (the Report). The Report discusses the impact of the Fintech to payment institutions and e-money institutions. Global payments revenues have increased by 11% between 2016 and 2017 as result of the fall in use of cash alongside the increase in use of mobile phones. A key feature of payments growth has been the rise in the use of digital wallets, which the EBA calculates has added around USD 40 billion to global payments revenues.

The EBA believes the following four trends are playing the greatest role in shaping the relevant markets. These are as follows:

  1. consumer expectations/behavior: customers are more likely to demand fast, cheap, easy, smooth and secure payments from anywhere;

  2. competition: the influx of newly authorized entities into the market is prompting firms to seek to expand their existing service offering, as well as looking to move up the value chain by targeting customers and SMEs;

  3. technological developments: firms are more likely to leverage technological solutions to integrate different payment methods into their systems and offer consumers more choice; and

  4. regulatory changes: the introduction of the GDPR and also PSD2 has broken open the market to new entrants, who are now able utilize customer data that hitherto were covetously guarded by large banks and institutions.


The Report speculates that the arrival of BigTech firms (such as Google or Amazon) to European payments market will potentially have game-changing impact to the market. In result, payment institutions and e-money institutions are likely to change the way payment institutions and e-money institutions approach their businesses: customer data will become ever more important as will the notion of fostering customer loyalty, something that the BigTech’s enjoy in abundance.


In the Report, the EBA highlights the following threats:

  1. the potential use of customer data, currently held by BigTech firms, may give them a huge competitive advantage over payment institutions and e-money institutions;

  2. large volumes of payments business are offered by UK-based institutions through their cross-border passporting activities. This sector of the market is likely to face disruption;

  3. dependency of payment and e-money institutions on banks: firms are dependent on banks in providing services to business customers, with no immediate alternative in the offing.


Are you curious how this may impact your business? Please feel free to contact us.

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