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Low cross-EU border banking activity reflects customer demand

Low cross-EU border banking activity reflects customer demand

​​​​​​​​​ESBG argues in just-released position paper on Commission Consumer Financial Services Action Plan

>> See position paper 

BRUSSELS, 9 October 2017 – ESBG released last Friday night its position paper around the European Commission-proposed Consumer Financial Services Action Plan.

​In the six-page report, ESBG welcomes the Action Plan, particularly agreeing with the assessment that cross-border activity in the retail financial services area is rather low. The association, which represents nearly 1000 savings and retail banks in 20 European countries who serve 190 million customers, notes that the low level corresponds to consumer demand and that the retail banking model is locally driven. They highlight one very practical barrier to cross border granting of credit: the difficulties related to creating and enforcing a mortgage across borders. The association also thinks, however, that the freedom to decide where to offer services should not be infringed upon as this concerns territorial restrictions. These are often the result of the exercise of contractual freedom, whereas the applicable legislative environment – such as AML, consumer protection legislation – also plays a vital role in deciding with whom, and in what territory, to do business.

Non-euro transactions much more costly than euro-denominated ones, ESBG evidence show

ESBG provides in the paper evidence showing that non-euro transactions entail considerably higher costs in comparison to euro transactions as they are processed differently. As a result ESBG sees the current pricing, which reflects the actual costs, is well presented in the customer framework agreements required to meet PSD2 requirements.

Product switching: Some difficulty stems from other providers, not banks

On product switching, ESBG points out that some of the difficulties associated with product switching are not caused by banks, but rather by other providers, requiring new SEPA agreements, thus slowing down the process. They emphasise that other channels are continuously being used to raise consumer awareness. Comparison websites are only effective, they note, when they pertain to comparable products. The scope thereof should be rather limited – whereas no quality certification currently exists for such comparisons.

Common creditworthiness standards: No way

ESBG opposes common creditworthiness standards as these would be based on an average which would exclude smaller borrowers financed by more specialised institutions, thereby limiting the granting of credit. Moreover, the approaches to creditworthiness assessment differ greatly across the EU. Therefore, locally rooted banks are best equipped for this assessment (as they have an excellent understanding of their customers).

Over-indebtedness: A problem that economic education can address

Concerning over-indebtedness ESBG argues that it is a very real problem and that financial education is key to combat it, whereas it must be noted that no direct connection between over-indebtedness and the granting of loans exists. At the same time ESBG welcomes the potential review of consumer protections legislation but would like to add that it should be of a holistic nature as more instances of gold plating may be found this way.

Digital identity checks: Need for the broadest scope of methods

With respect to digital identity checks, ESBG supports the Commission's intent while adding that any initiative to provide for the broadest possible scope of possible methods to be used in the process of digital on-boarding is looked upon favourably.


European Institutions; European Supervisory Authorities (EBA-ESMA); Proximity