European Commission review of the Mortgage Credit Directive

On February 28, ESBG sent its response to the European Commission questionnaire on what to include in the upcoming Review of the Mortgage Credit Directive (MCD). The consultation, published in November, covered 55 questions. The review of the legislative text is expected to be launched later this year.

In our response, we asked for a limited review on the necessary topics only. Our overall position is that an in-depth review of the Mortgage Credit Directive would be premature, at this time. Since the last review took place in 2016 and it concerns long-term finance, more time is needed to evaluate the impact of the changes included then.

As the mortgage market is not operating much cross-border, we believe that EU level intervention is not necessary. Consumers rely heavily on local expertise of mortgage advisers and working in their own languages and within national legal frameworks.

However, one area we are in favour of a review is the compatibility with other EU texts. For example, the General Data Protection Regulation, the EU Accessibility Act, and the Rome I Regulation will all impact the MCD so alignment is necessary.

As always, ESBG is pleased to see work being carried out on consumer protection. ESBG members have a long history of financial education and welcome the provision in the MCD text to increase financial education for consumers, which is more defined at national level.


Clear and fair rules for the use of machine learning in Internal Rating Based models

The European Savings and Retail Banking Group (ESBG) welcomes the initiative of the European Banking Authority (EBA) to discuss the implications of the use of machine learning (ML) in the internal rating based (IRB) models for credit risk.

We encourage the EBA to build a clear and fair supervisory scheme that goes further and allows compliance with the proposed principles to be measured, and that finds the balance between the advantages and the new risks that machine learning brings.


Call to EBA for equal treatment of actors when accessing consumer payment accounts

The European Savings and Retail Banking Group (ESBG) welcomes the opportunity to respond to the public consultation from the European Banking Authority (EBA) on the amendment of its Regulatory Technical Standards (RTS) on Strong Customer Authentication and Secure Communication (SCA&CSC) under the Payment Services Directive (PSD2) with regard to 90-day exemption from SCA for account access.

ESBG and its members strongly disagree with the EBA’s claim that banks fail to provide user-friendly Strong Consumer Authentication (SCA) methods and that its application often causes friction in the customer journey. Instead, ESBG calls for equal treatment of actors when accessing consumer payment accounts.


ESBG response to consultation on Pillar 3 disclosure of IRRBB

ESBG proposes to further delay the disclosure of the net interest income (NII) risk measures until the EBA requirements for these NII risk measures are specified.

BRUSSELS, 3 September 2021 – The European Savings and Retail Banking Group (ESBG) replied on 30 August to the European Banking Authority (EBA) consultation on draft implementing technical standards (ITS) on Pillar 3 disclosures regarding exposures to interest rate risk on positions not held in the trading book (IRRBB).

The draft ITS puts forward comparable disclosures for stakeholders to assess institutions’ IRRBB risk management framework as well as the sensitivity of institutions’ economic value of equity and net interest income to changes in interest rates. The proposed standards will amend the comprehensive ITS on institutions’ public disclosures, in line with the strategic objective of developing a single and comprehensive Pillar 3 package that should facilitate implementation and further promote market discipline.

ESBG believes that the approach chosen by the EBA for the development of the draft ITS is quite problematic due to the lack of a definition for net interest income (NII) metrics.

The disclosed NII metrics may not be comparable as long as the EBA does not define what it understands by these NII metrics. Moreover, it is very likely that future disclosed NII metrics will be based on different methodologies. Optimally, the methodological requirements for the calculations would be clarified by the EBA before the banks would be forced to disclose the calculated results. If this is not feasible, a clarification that banks may use internal metrics for disclosure until further notice would help.

In other words, the current chronological order of the published standards shows potential for conflict. We understand the EBA’s efforts to create as much clarity as possible for disclosure in a timely manner. However, for understandable reasons, the EBA has not yet defined the requirements under Article 98(5a) CRD to be applied to the metrics to be disclosed. That is why we strongly oppose the EBA’s expectations of institutions to apply the present draft before it enters into force.

Instead, ESBG proposes to further delay the disclosure of NII risk measures until the EBA requirements for these are specified.




Digital Euro Quote

ECB and ESBG committed to a successful Digital Euro

BRUSSELS, 15 July 2021 – ESBG welcomes the decision of the Governing Council of the European Central Bank (ECB) to launch the investigation phase of the digital euro project as announced by the Eurosystem. The investigation phase will last 24 months and will aim at addressing key issues concerning design and distribution.

“ESBG and its members welcome the Eurosystem’s announcement and look forward to the coming interaction with the ECB”, said Sofia Lindh Possne, Chair of the ESBG Task Force on Central Bank Digital Currencies and Swedbank’s Senior Advisor Group Regulatory Affairs.

ESBG supports the ECB’s aim to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money. ESBG and its Members also support the efforts towards an environmentally friendly design of the core infrastructure of a future digital euro.

ESBG especially welcomes the involvement of different stakeholders via the creation of the Market Advisory Group. ESBG stands ready to engage with the Eurosystem and the other European Institutions during this investigation phase. In anticipation thereof, ESBG already drafted and issued a high-level position paper on the key challenges that the digital euro will face. The paper, published here, also suggests four possible use cases that could especially benefit from the issuance of a digital euro.

ESBG hopes this is a good starting base for a fruitful dialogue in the months to come and is looking forward to a further engagement on this important file with the ECB.

Notes to the editor

ESBG’s high-level position paper on a digital euro is available for download below in full and in summary format. It analyses five challenges for the issuance of a digital euro and presents four possible use cases that could especially benefit from the issuance of a digital euro.


Euro slider by Tabrez Syed

ESBG analyses digital euro’s main challenges

BRUSSELS, 6 July 2021 – Since the publication of the report on a digital euro in October 2020, ESBG and its members have been following closely and with great interest the developments made by the European Central Bank (ECB) in the project of a digital euro.

In this context, ESBG has recently finalised a high-level paper that analyses some of the main challenges that a digital euro will face. The paper touches upon five main topics: First, it describes the bank funding model and the challenges and risks that the introduction of a digital euro could bring about. Second, it discusses the topic of limits to individual holdings and finds that any envisaged limit should be based on a sound assessment of available data. Third, it focuses on the impact that a digital euro would have on intermediation and competition. Fourth, it describes the point of view of the customers. Fifth, it examines cross-border payments.

Finally, in suggesting four possible use cases that could especially benefit from the issuance of a digital euro, ESBG and its members stand ready to further engage with the ECB on the possible issuance of a digital euro.


ESBG’s Head of Payments appointed as member of EU Commission Expert Group

BRUSSELS, 1 June 2021 - The European Savings and Retail Banking Group (ESBG)’s Head of Payments and Innovation, Diederik Bruggink, 52, has been appointed as member of the European Commission’s Payment Systems Market Expert Group (PSMEG) from now until the end of 2025. Mr Bruggink was also part of this influential group between 2017 and 2021.

The expert group’s objective is to advise the Commission in the area of payments and to assist the Commission in the preparation of legislative acts or policy initiatives regarding payments, including fraud prevention issues related to payment industry and users. The group is coordinated by the Directorate General for Financial Stability, Financial Services and Capital Markets Union (FISMA).

Diederik Bruggink is also Head of Payments and Innovations at the World Savings and Retail Banking Institute (WSBI). At WSBI-ESBI, Mr Bruggink analyses the multiple dimensions of the payments market, proposing and assisting in agreeing member positions with respect to their payments and related businesses. He advocates the associations’ positions on payments with policymakers, regulators, standardisation bodies, industry associations, and enabling a constant member dialogue on developments, with a particular focus on innovation.

Prior to joining WSBI-ESBG in 2017, he managed since 2012 his own international consultancy practice. In 2009-2012 he was Vice President of card schemes at the Royal Bank of Scotland. Prior to that, he was appointed in 2005 within ABN AMRO’s market infrastructures department as Vice President of payments and cards. He also worked previously with Mastercard where he was a senior business leader in the global debit team. He started his career with Capgemini Global Financial Services in 1996.



During ​the next five years, US$1 trillion in worker remittances will flow to rural areas, dwarfing official development aid by a 4-to-1 ratio – and rural areas only represent half of worldwide remittances.

Background on remittances

To be able to send remittances is the reason why so many people – almost 1 in 8 people on the planet – migrate, whether across borders, continents, or even within their country of birth. Migration flows may change due to political or economic drivers, but the phenomenon will remain.

Whilst remittances are “people’s money” much needed by the beneficiaries and their communities for daily consumption, research indicates that this market segment also saves, requires insurance products, and takes up and reimburses loans – though today generally not from the formal banking sector – and responds positively to financial education efforts.

WSBI and Fair Value Remittances​

WSBI’s payments practice already in 2003 formulated the “Fair Value Remittances” value proposition which promotes end-to-end transparency and accountability in migrating from cash to account-based remittances and served as input to the 2007 BIS/World Bank International Guiding Principles. WSBI also developed a proof-of-concept international remittance switch allowing multiple remittance service providers to interconnect thus providing for a cost-efficient alternative to dominant networks. WSBI continues to work with policy makers and members worldwide to continuously improve the remittance value proposition whilst enabling wider financial inclusion through remittance-linked products and services.



ESBG acknowledges that access to cash is a relevant concern and may become a crucial issue in light of pandemic-related developments. 

Although access to cash needs to be ensured for the population, especially that in rural and remote areas, the secure management for cash and the maintenance of a wide network of ATMs is expensive for banks. In terms of optimising the cash cycle, payment service providers and other participants in the cash value chain, should pursue two main, complementary strategies, namely shortening, and thus optimising, the cash cycle, and continuing to reduce manual handling and any redundant processes. In parallel, a broader discussion is needed on what cash services banks and other stakeholders render to the wider public and at what cost. Following a proper debate, these “stakeholders” could be widened to include merchants as well as payment services providers and FinTech companies.

Identified Concerns

Despite continuous growth in cashless transactions, we observe an increasing concern about the need to ensure continued access to cash (both notes and coins) from certain parts of the stakeholder community with some expectations that this access should not need to cover its own costs. At the same time banks are required to heavily invest in the development of new means of electronic payments (most notably the further development of pan-European instant payments) while facing competition from digital-only providers that do not support cash services or face-to-face services, do not invest in the necessary infrastructure and yet use the infrastructure provided by banks for the benefit of their own customers. Banks are keen on servicing all their customers, regardless of their digital abilities. However, digitalisation can create tensions and impose choices, in particular in the areas of co-existence of cash and electronic payments and providing services to customer segments that hesitate to or have difficulties in adapting to the digitalisation of payments and other financial services.

In terms of ensuring citizens’ access to cash, banks realise that they are responsible for cash distribution. Handling cash, however, is labour-intensive and the cash cycle consists of various actors adding to complexities in the value chain. A decline in cash usage, where the COVID-19 pandemic has worked as a catalyst, has a logical effect on the related unit costs, as these tend to increase. Given this backdrop, there is need for a proper debate, choices to be made and expectations to be set regarding the cost and type of cash services banks and other stakeholders provide to the wider public. Following a proper debate, these “stakeholders” could be widened to include merchants as well as payment services providers and FinTech companies. Therefore, ESBG supports the need to find a sustainable balance between consumer demand for cash and social responsibility on the one hand and efficiencies in the cash cycle on the other hand.

Why Policymakers Should Act

Without proper intervention, a decrease in usage will result in an increase of per-unit cost for providing cash services. Actors will withdraw from providing cash services as it will no longer be economically attractive, and this will in fact further propel the increase of per-unit costs. Therefore, ESBG advocates for the creation of a forum to discuss how the cash cycle can be optimised as well as under what conditions cash services should be provided by whom.​


Both PSD2 and the Interchange Fee Regulation (IFR) have contributed to decreasing the use of cash, on the one hand by stimulating innovation especially in digital payments, on the other hand by making pricing for card acceptance at merchants more attractive. COVID-19 is also accelerating this development. Some countries have introduced caps above which cash transactions are not allowed – this in an attempt to fight money laundering and terrorist financing. Also, further reductions in the issuance of high denomination banknotes (e.g. the EUR 500 banknote) may contribute to this. Cash fulfils the needs of certain groups but not necessarily the needs of society as a whole, so finding a proper balance is key.


Open Banking

Digitalisation is a major driver for innovation and will inevitably accelerate in the future. It is important that banks are able to innovate and compete on equal footing with each other and also with other non-bank players.

With respect to open banking, we recommend EU authorities to allow its development in Europe through coordinated market-led initiatives and not by regulation. Open banking should be based on API technology and on mutual benefits/reciprocity for all the parties involved in the ecosystem. In the specific area of payments, the appropriate first step should be to work on a payment data sharing model on a contractual and economically sustainable basis that does not go beyond what it is legally required by PSD2 and/or GDPR.

The current asymmetries in data access should be solved in a market-driven harmonised European framework. A multi-sectorial approach would be needed in order to fulfil consumer expectations, ensuring a level playing field for all players, mutual benefits and the highest standards of consumer protection. Significant investments were required that were not offset by a clear business case. As these infrastructures are now further maturing, ESBG believes that it is time to monetise them to develop services that go beyond PSD2. A flourishing datadriven market – be it in payments, broader financial services or between different industries – should be based on principles of mutual benefits and potential monetisation of services and infrastructure by all market participants as well as reciprocity.

As for the potential development of ‘open finance’ extending beyond payment accounts, and the development of a European data economy, financial services should not be considered in isolation, and data sharing should not be limited to financial services. The current asymmetries in data access should be solved in a harmonised European framework. A multi-sectorial approach would be needed in order to fulfil consumer expectations, ensuring a level playing field for all players, mutual benefits and the highest standards of consumer protection.

Identified Concerns

Banks have developed APIs that comply with PSD2 requirements. However, ESBG believes that unlike the situation in the US, PSD2 is not adapted to develop and strengthen open banking. On the one hand, PSD2 being a Directive has entailed fragmentation among member states. On the other hand, a flourishing datadriven market should be based on principles of reciprocity, mutual benefits and potential monetisation of services and infrastructure by all market participants.

The fact that PSD2 requires banks to grant third parties access to customer payment account data without being compensated for that does not outweigh the ensuing investments that banks need to make. A different approach than PSD2 should be taken, such as the one in the US, where industry standardisation and bilateral agreements are working as a catalyst for development on commercial terms.

Moreover, from a data privacy perspective, global BigTech companies’ existing data superiority combined with access to payments data is extremely concerning as it could lead to unintended negative outcomes for EU citizens. BigTech companies, indeed, are mostly un-regulated. Furthermore, the EBA determined that up to 53% of the FinTech sector financial services are not yet regulated (see EBA Discussion Paper on FinTech – 2017). This can ultimately become a risk not only from an economic, political, operational and privacy perspective but also from a consumer perspective.

The threat of undesired dependency increases when considering both growing global BigTech and many smaller unregulated entities’ interest in payments. There are reasons why this industry is regulated in the first place. Dependency on such actors for basic EU internal market functions underpinning the economy – starting from payments but likely expanding to consumer finance, mortgages and other financial services – may harm the European economy. ESBG believes EU regulators should follow the principle ‘same risks, same rules’. It is therefore important to find a balance between consumer protection and the EU’s competition potential.

Why Policymakers Should Act

Beyond PSD2 and on the road towards open banking and a data-sharing economy, there is need for a fairer foundation to be put be in place. An access scheme that clearly spells out rights and obligations, based on mutual benefits, can provide the necessary building block safeguarding the interests for all involved. For these developments to take place, the guiding principles should be the following:​

  • Support the development of common API-standards, so that consumers can benefit from the safe availability of data. APIs should be the bespoke and preferred means of access to third-party data due to security, scalability and interoperability reasons;
  • Ensure a level playing field by following the principle ‘same risks, same rules’;
  • Put consumers at the centre of the market by ensuring they have a clear understanding of the risks and establish robust consumer protection measures;
  • Ensure the safe and ethical collection and processing of data on commercial terms.​


With the opening up of payment accounts data and infrastructure, PSD2 has paved the way for a new banking era. This, however, is only the first step towards the wider development of data sharing, both in the area of payments and financial services, and the broader economy. PSD2 only opened up payment accounts; there is no such a thing as open banking for the time being. As a consequence, banks have developed APIs that comply with PSD2 requirements. There is still a lot of fine-tuning to be made, such as supervisory convergence and the alignment with other pieces of legislation, such as the GDPR, which we believe to be sufficient for the sharing of data.