PSD2 in the Slovak Reality: Friend or Foe?

The PSD2 implementation should go live in Q3 2019 in most EU countries - but in Slovakia, it has been operational for 22 months already. We have discussed the liberalization of the Slovak fintech ecosystem and looked at the future use cases that it might bring.

Slovakia has moved forward a little bit faster than other European countries in implementing PSD2.  The official deadline for all companies within the EU to comply with PSD2’s Regulatory Technical Standard was just over a month ago – on 14 September 2019.  Although PSD2 has been live in Slovakia for 22 months now, Slovak banks have yet to implement strong use-cases. To date, the only tangible working integration has been between CSOB Bank and Tatrabanka who have collaborated to display multiple accounts from different banks within a single app. 

Most experts agree that the next step for the Slovak ecosystem is to implement instant payments between banks.  The representative from the Slovak Ministry of Economy has gone on record with an initiative to make this a reality by 2022.  By comparison, in the Czech Republic, instant payments between banks have already started in February of this year. “Although banks must be mindful of the challenges ahead before entirely taking advantage of instant payments, embracing such innovations will be a crucial factor in meeting customer’s growing expectations for immediacy and for more secure and efficient payments” commented Tomas Hladek, Senior Executive of the Czech Banking Association in a recent interview

The National Bank of Slovakia has created an Innovation Hub where fintechs (either Slovak or international companies) can have direct conversations with the regulator about various use cases – specifically, which ones require regulation/licencing and which do not.  Since the beginning of the program (Spring, 2019) about 30 projects have held discussions with the regulator.

Some of the business models that NBS are actively discussing in the Innovation Hub include:

  • Alternative Payment Methods
  • Crowdfunding
  • Robo-advice
  • Crypto-Assets and Initial Coin Offerings (ICOs)
  • InsurTech
  • Algorithmic Trading
Discussion about PSD2

Through the Innovation Hub, NBS also keeps in touch with developments in the market with the aim of supporting the improvement of its operations rules.

The Slovak Fintech Ecosystem

Research on the Slovak fintech ecosystem conducted by Ernst & Young has revealed that there are about 70 fintech companies in Slovakia: about 30% of them are in the crypto space and blockchain, 20% are focused on money transfers and payments while another 20% are focused on peer-to-peer lending, crowdfunding, savings and investments. The rest of them are primarily involved in enterprise processing, big data analytics, insurance and other. The research is expected to be made public later this year. Also of interest is a fintech ecosystem overview developed by Booster Labs – it provides insight into the fintech scene in Slovakia, and profiles some of the companies changing financial services in the country.

Large Slovak banks, like Tatrabanka, remain sceptical about any real innovation benefits coming out of PSD2 for consumers.  They view PSD2 as something forced onto them by regulators (that they will need to pay for) but will accrue little benefit for the bank.  Tatrabanka has conducted a number of hackathons and events to determine potential use cases that can be built on top of PSD2, and have identified more than 1,500 ideas so far.

Julia Cilikova, Director of Regulatory and Risk Management Methodology at the National Bank of Slovakia (NBS) commented that PSD2 regulation should not act as a benefit for corporations in the first instance – but rather benefit consumers first.

At the end of the day, regulation such as PSD2 should not act as a limit or restraint to companies acting in the public interest and providing benefits to consumers.  Rather, such regulation acts as a safeguard against bad actors whose actions could potentially destroy trust in the banking system.

Our View from Inside the Vacuum

At Vacuumlabs, we feel that PSD2 is something a lot of people are talking about across the UK and EU, but we still haven’t seen an amazing start-up emerge whose value proposition contains that “wow factor”.  However, we are delighted to see the Innovation Hub launched by NBS which we think will encourage more discussion about how PSD2 can be thoughtfully implemented. 

Overall, we are happy to see more discussion about fintech innovation in Slovakia and are eager to continue to be a part of it.  We seek to even take a more substantive role in these discussions as we have substantial experience in this area – we’re currently involved in such things as launching challenger banks, developing open banking API’s, and building Standard Chartered’s virtual bank in Hong Kong.

Matej Ftacnik at SlovakiaTech about PSD2

Our Chief Experience Officer, Matej Ftacnik, recently moderated a panel at SlovakiaTech Forum on the subject of “Implementation of the European PSD2 Directive in Slovakia”.  Participants in the discussion included:

  • Jan Magdosko – Project Manager for Digital Banking Innovation at Tatra Bank
  • Martin Peter – Director of the Banking Department at MF SR
  • Miroslav Kral – CEO and Co-Founder of Besteron
  • Julia Cillikova – Executive Director, Regulation and Protection of Financial Consumers at NBS
  • Mikulas Zalai – Director of Advisory at EY

About Vacuumlabs

Vacuumlabs is a global centre of excellence for digital design and engineering.  We solve big technology problems for leading banks, fintechs, VC’s, scale-ups and start-ups.  By enabling authentic tech talent to solve big tech challenges we deliver fast and cost-effective go-to-market for innovative clients. We are a global enterprise with 7+ years of experience, operating across 17 countries with 200+ employees worldwide.  Our industry focus is in the areas of fintech, blockchain/crypto, and digital banking. Let’s build awesome products together.


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