This will result in increased competition in the financial sector with banks no longer just competing with other banks but also with non-banks and financial technology (‘fintech’) firms, which will have easier access to the market.
A failure by banks to develop strategies enabling them to realise commercial opportunities arising from PSD2 could be a risk to long-term viability, particularly with net interest margin, and risk weight pressures incentivising banks to try to generate more fee income, including from this aspect of their business. Fintech is blurring boundaries and changing barriers to entry7.