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EU-wide internet banking application for managing more accounts from multiple banks in one place

Periodic Reporting for period 1 - EVERIFIN (EU-wide internet banking application for managing more accounts from multiple banks in one place)

Okres sprawozdawczy: 2019-05-01 do 2019-10-31

In recent years, cards have become the most widely used payment instrument in the European Union. The statistics for 2018 just confirmed this trend again. Card payments accounted for nearly a half (46%) of all non-cash transactions processed in the EU. Precisely, there were 90.7 billion non-cash payments made in the euro area. Most of them were generated by retail payment systems, also known as point-of-sale or POS systems. [1]

The current point-of-sale market in Europe is dominated by MasterCard and Visa. The American duopoly – Visa & Mastercard processes together 80% of all card transactions in Europe. A market dominated by a few powerful players, cannot function effectively. The major players set prices and slow or even stop differentiation without the risk of losing business. The lack of competitive pricing together with technological dependencies increases the geostrategic risk for the European Economic area.

Another risk is maybe less obvious but it can cause serious problems in the area of so-called data sovereignty. It means that when European payment data are digitally stored, it can be subject to the laws of more than one jurisdiction. If the jurisdiction of the entity is outside the EU, it can be difficult to enforce the European privacy laws. For example, how can then Europe guarantee to its citizens that the payments are not monitored without their consent?

Moreover, the current dependency on American or Chinese schemes in combination with national laws such as the U.S. Patriot Act amplifies the threat of financial data of foreign entities being misemployed, according to the report[2] published by a technological think-tank Core. Therefore data protection should be of utmost importance for political stability.

The report also names the recent data leakage scandal of Edward Snowden disclosures which should have provided evidence that the digital information and telephone conversations of government leaders could be intercepted by state agencies with the help of private enterprises. In this light, the processors of European payments who domicile in non-European jurisdictions can be potentially prone to outside pressure, which could be even leading to interruptions of payment services or threats to do so.

In view of current global trade disputes and political tensions, it may be more relevant than ever to ensure independence, state the authors of the report. They further continue with the worrying examples: the U.S. sanctions on Iran resulting in payment shutdowns, the trade conflicts between China and the U.S. regarding intellectual property rights and trade imbalances or the cutting-off of Russian banks from the international SWIFT banking network over the Ukraine conflict.

The question arises from a geopolitical perspective: “Is it acceptable to allow a dependency with such far-reaching consequences for Europe?”

The scope of the feasibility study within Horizon 2020 SME PHASE I. was to investigate two additional on-top features for our multi-national banking app Everifin which is intended for all EU Member States + Norway, Iceland and Liechtenstein. We focused on instant payments and credit score features. The goal of the study is to shape our product to better fit the market needs. The study focuses on operational, technical, legal and business feasibility of the Everifin project, especially for instant payments and financial health reporting (credit score) features.

[2]: Fabian MEYER, Leon KUHLMANN, Sebastian MÜLLER: Card Schemes – Europe Could irreversibly lose its position in the payment market -19th March 2019
Market research of the acceptance and evaluation of the Everifin among users:
- Instat Payments: personas, use-cases, competitor analysis incl. their marketing activities
- Financial Health Reporting (Credit Score): personas, use-cases, deep competitors analysis incl. their marketing activities
- Clickable designs for testing purposes on a sample of potential users
- Participants recruiting: criteria based on persona definition
- User tests: user scenarios, 1:1 testing sessions, metrics: overall communication of the platform to the end-users, ease of use, navigation, validation of the business model
Output: Marketing strategy and Operation Feasibility Report: findings, recommendations

Technical Feasibility
Technical assessment of recommended designs, a security consultancy
Output: Technical feasibility report, resource planning for the next development

Economic Feasibility
Costs and revenues estimation of planned operations
Output: Business Plan

Deliverable: Feasibility report, including a business plan
At the time of writing this feasibility study, our solution is aggregating 6 bank APIs (CY, CR, DE, PT, SK, UK). The backbone architecture is put in place. Additional bank APIs can be plugged-in easily. The whole service mesh, including authentication and authorization, is deployed in a cloud environment. This state of the backend aggregator, multi-banking, and e-bills corresponds to TRL 7, instant payments to TRL 6.

Before the system can be released for public use a PISP and AISP license is required. A license is issued by one national regulator who does the supervision. It can be then “passported” to any other EU country by requesting a simple registration. Once the local register is updated, Everifin can start providing services to the public. Everifin´s license application documentation has been already fully drafted and now is under the review of a law office that will assist us with all interactions with the regulator until a successful license issuance.

The main focus of Everifin is to deliver instant payments as a product for merchants and the end-users. Everifin provides an ideal user experience for merchants and customers to use a bank transfer as a payment method in the shop. The instant payments which work across Europe represent an opportunity for Europe to take back control of its own payment flows. Everifin can have a transformative effect on the European retail landscape. It can change the way consumers pay for goods and services.

Example: if you buy a coffee with your card, VISA will block the needed funds on your bank account. It can take like 23 days until the merchant gets his money from your purchase. In Everifin, we do it differently. If you buy a coffee with Everifin, the merchant gets your money in 15 seconds after you authorize the payment. Everifin brings better cost-efficiency. It also improves liquidity management. Imagine the boost effect this can have on the European businesses.