Online banking services
FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).
API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.
Through these services FinTechs offer services with new functions, e.g. enabling customers to manage their accounts online and in real time.
BaaS – Bank as a Service/BaaP – Bank as a Platform:
The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which “use” the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.
Attitude of the country towards online-banking services
Online banking services are generally seen as a good means to move from a cash-based payment culture to a more digitalised one.
Online banking services are subject to prior authorisation and regulated by the Bank of Italy.
Obligations and requirements to provide online-banking services described above
Online banking services are regulated under the general rules governing banking activities – i.e. the collection of savings from the public with the repayment obligation exercised jointly with credit services. If this is the case, online banking services shall be provided only by banks authorised by the Bank of Italy to exercise banking activity. No separate regulatory authorisation is needed to provide banking services online.
The authorisation is subject to the conditions listed under Section 14 TUB. Among others, it is required that banks are incorporated either as joint stock company (società per azioni) or limited liability cooperative by shares (società cooperativa per azioni a responsabilità limitata) and that they have their registered offices in the Italian territory. Specific rules shall, however, apply to banks established in an EU Member State. Moreover, banks are required to have a minimum initial capital equal to EUR 10 million or EUR 5 million depending on the type of concerned bank.
Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area
Online banking is seen with favour by the legislator, both at EU and Italian level, and several existing regulations, like the one related to electronic identification, are able to foster the development and the use of such services as an alternative to the traditional relationship between banks and their consumers. Particular attention has been paid, and will likely be paid in the future, on issues like data protection and cybersecurity that might deeply influence the provision of online banking services.
Market size for online-banking services and biggest companies in this business area
According to the last Bank of Italy Annual Report, about 40% of Italian families made use of online banking services at the end of 2020; an increase over previous years also due to the pandemic. This represents a further step into the digitalisation of consumer banking, as mentioned by the banking regulator under that report.
As a current trend, the main local banking groups are moving a significant part of their services online. On the one hand, incumbents are undergoing an in-depth review of their existing business models to make them more open to digital innovation and the FinTech mindset, also by making extensive use of outsourcing to IT providers.
On the other hand, new entrants are setting up innovative online platforms and starting fully digital banking firms (see for example Illimity Bank, a newly authorised and entirely online bank, focusing on small and medium enterprises lending and on NPLs trading).
Additional comments regarding the economic situation for online-banking services or what FinTech’s must be aware of in this business area