Reports in the media are suggesting that four of the five main retail banks (AIB, BOI, PTSB and KBC, but not Ulster Bank) are joining forces to launch a new digital payments app which they hope will take on digital-only payment platforms like Revolut, ApplePay and N26.
The Irish Independent reports the banks have provided notification of their intention to set up the venture (Syntech Payments) to the Competition and Consumer Protection Commission (CCPC), hence the media story, though Project Pegasus has been in train for around 2 years and is understood to have the backing of the Central Bank.
The banks will need CCPC approval under competition rules, so the competition watchdog has launched a preliminary investigation into the plan. The Banking and Payments Federation of Ireland (BPFI) banking umbrella organisation says the objective will be the planned launch of "a multi-banking app that will enable Irish users to send and make payments in real time."
One of the directors of the joint venture is from the BPFI and the venture will be open to other financial institutions like An Post and credit unions. Goodbody Stockbrokers say quantifying the fee income headwinds from fintechs is very difficult to measure, but clearly meaningful to elicit a co-ordinated response, so the move by the mainstream banking sector probably plays to the old maxim that “the best defense is a good offense”.
Goodbody say if the banks show a willingness to share a platform on digital payments, it raises the questions as to whether there are other projects/ventures that could be considered as they all look to reduce costs/digitalise as low rates and competition continue to pressure revenues.
According to Goodbody Stockbrokers, "Revolut has c.1.2m Irish customers and recently set a target of 2m, noting there is also a huge opportunity in business accounts. Similarly, N26 has round 150k Irish customers and is targeting 1m. Other banks across Europe are considering similar launches to meet the fintech challenge though the Irish approach, incorporating all the main domestic players (bar one), certainly stands out."