#179 - Claude Meurisse (LuxHub) - The RegTech riding the regulatory complexity wave 💆🏻♀️
CEO of LuxHub
You were in my thoughts between Sommarøy and Skellefteå, a long journey during which I had the time to compile this small collection of regulations for you. Wishing everyone a smooth return to work!
Originally established to streamline compliance for four banks and meet the requirements of the Second Payment Directive, LuxHub underwent a necessary evolution to broaden its vision and establish itself as a major player in the Open Banking landscape across Europe.
This leads us to engage in a discussion with Claude regarding governance, LuxHub's approach to considering shareholder interests, mitigating conflicts of interest, and expanding its customer base. We also delved into how this startup broadened its initial scope of operations, diversified its offerings, and how they identified evolving needs.
We also covered current products, including the API marketplace, and explored upcoming developments that encompassed a variety of products related to the implementation of European regulations and directives such as FIDA, PSR, and PSD3.
If you need a little regulatory reminder, this is a must listen!
Regulatory update
It took some time, but on June 28, 2023, the European Commission announced a broad range of proposals to amend and modernize the second Payment Services Directive (PSD2) with a new third one - PSD3, introduce a new payment services regulation (PSR), advance a new framework for accessing financial data (FIDA), and establish a framework for a potential new digital form of the Euro (the digital Euro).
The publication of these four different yet closely related proposals signifies a step forward for the entire financial services sector in Europe.
The proposals put forward will inevitably have significant consequences for several players, including consumers, banks, fintechs, and the industry in general.
👉 To (re)read the press release, click here: “Modernising payment services and opening financial services data: new opportunities for consumers and businesses”
PSD3
PSD3 is not merely an update of PSD2. It constitutes a new directive rooted in both PSD2 and the E-Money Directive. PSD3 encompasses all the directives concerning licensing and the criteria for being a licensed payment institution or an electronic money institution. To reduce fragmentation across Europe, the Commission opted to consolidate the rest into a payment services regulation, thereby sidestepping the need for transposition and interpretation into national law.
PSR
The rule PSR defines the rules for acting as a payment service provider (PSP). These rules come with an update to Regulatory Technical Standards (RTS) – which I discuss with Claude – and pertain to "strong customer authentication and common and secure open communication standards."
All these changes are anticipated to enhance customer rights and reduce the risk of fraud.
These updates and changes aim to strengthen user protection and consumer confidence by refining the rules, extending the verification of IBANs and improving the exchange of information on fraud between PSPs.
FIDA - Open Finance
This new financial data access framework is a flagship initiative of the EU's digital finance strategy and represents one of the cornerstones in the implementation of “Open Finance” across the EU.
FIDA will empower consumers and SMEs by giving them the authority to grant third parties or data users access to their financial data, which is held by financial institutions or data holders. Virtually all financial services data will fall within this scope. Companies can assume a dual role, serving as both data holders and data users.
The digital euro
The recent package of proposals centers around the creation of a legal framework for a potential digital Euro.
Through the introduction of a digital Euro and the preservation of the role of cash, the Commission seeks to guarantee that individuals in the Eurozone have the freedom to select their preferred payment method.
👉 For the details, you have to listen to Claude.
LuxHub
LuxHub, a FinTech company established in Luxembourg, positions itself as a facilitator within the European Open Banking ecosystem. Founded in 2018 in response to PSD2, it developed a secure API platform that initially enabled banks and fintechs to share data and services. LuxHub acts as a bridge between traditional financial institutions and fintechs, helping banks comply with PSD2 regulations and enabling fintechs to access bank customer data with their consent.
This initial offering included services such as account aggregation, payment initiation, account information services and identity verification services.
Since then, their offering has expanded significantly.
A solution designed to meet the requirements of CESOP (Central Electronic System of Payment Information), which aims to detect potential VAT fraud in e-commerce within the context of cross-border transactions.
A solution developed to fulfill the requirements of CEDAR (Central Electronic Data Retrieval System) in Luxembourg. The Commission de Surveillance du Secteur Financier (CSSF), through circular 20/747, requested the utilisation of an API for real-time access to various customer data, including account holder information, beneficial owner details, bank data, payment information, and vault records.
Custodix: This "hub" aims to strengthen and streamline the relationship between insurance companies and custodian banks by offering standardised and automated data extraction and processing.
An API marketplace 👉 here
Among LuxHub's clients are banks (SEB, Banco Santander, Swissquote, etc.), FinTech players (3SMoney), and insurance companies (Baloise).
📗 This week’s recommendations
The Sales Acceleration Formula by Mark Roberge
😁 and….
Financial data access and payments package (EU commission) 👉 Read
The new EU Financial Data Access framework: opening up data across financial services (Deloitte) 👉 Read
Review Of EU Proposals For PSD3, PSR, FIDA and Digital Euro (Bird & Bird) 👉 Listen
🎧 The episode
LuxHub (🇫🇷)
Spotify / Google podcast / Deezer
👋 Contacts
Claude Meurisse / LuxHub
Sources: LuxHub, Fabrick.