In September 2019, PSD2 went live in the EEA.Digital banking has become the new normal in Liechtensteinand banks are already offering open banking.
Open banking is banking practice that securely shares financial information such as consumer banking, transactions and other financial data to third-party financial service providers (Estevez, 2020). Sharing data is done through the use of application programming interfaces (APIs) and only with the consent of customers (The Balance, 2020). Open banking is the drive behind both innovation and competition in the financial industry (Cahill, n.d.).
PSD2 is a European Directive that regulates electronic payment services, was implemented in all EEA countries in 2016 and went live in September 2019.
With an increased demand by customers for a digital experience and digital products, digital banking has become the new normal in Liechtenstein (Salzgeber, 2019). Furthermore, Liechtenstein has set out to become a frontrunner of the digitisation of the financial industry and the government has implemented a Financial Center Strategy to improve the attractiveness of the country as a financial hub (Salzgeber, 2019).
Liechtenstein is a stable business location with over 4,300 active companies (FMA, 2015). Furthermore, Liechtenstein is a member of the EEA and also has a Customs and Currency Treaty with Switzerland, meaning Liechtenstein has both the freedom to provide services in all EEA countries and benefits from privileged access to the Swiss economic area (FMA, 2015).
In regards to regulations, there are no specific regulatory sandboxes. However, the government prioritises innovation meaning that fintech innovation is incentivised by a friendly regulatory atmosphere. Furthermore, the FMA has set up an internal competence team called the Regulatory Laboratory, which deals with regulation and innovation regarding fintechs (FMA, 2015).
Liechtenstein banks have stable and high-quality equity capital resources with an average core capital of around 20%, both at the individual and consolidated levels. Liechtenstein has a total of15 banks, the largest of which include LGT Bank and LLB.
Open banking uses an API that allows financial institutions to exchange financial data, usually through a third party-developed application (Estevez, 2020). These applications are developed by up and coming FinTech companies with the mission to improve digital banking.
To access and use the open banking APIs in Liechtenstein, you will need to acquire an account information service provider license, issued by the relevant authority. Furthermore, you will require a relevant certificate (QTSPs or eIDAS), compliant with PSD2 requirements. Alternatively, you can use an open banking platform, such as Nordigen.
Nordigen is an authorised Account Information Service Provider. We provide free access to bank data and premium data insights, using regulated PSD2 connections.