AdC’s sector inquiry on FinTech: 74% of companies operating in Portugal consider that there are barriers to market entry

​Press Release 03/2021
AdC’s sector inquiry on FinTech:
74% of companies operating in Portugal consider that there are barriers to market entry
The AdC – Portuguese Competition Authority recently carried out an analysis of the FinTech market in Portugal to follow up on the recommendations made in 2018. The results show that although some progress has been made, obstacles to competition and innovation persist in the financial sector and that full implementation of most of the measures recommended by the AdC is still pending.
In parallel, the AdC conducted a sector inquiry to companies providing financial services based on digital technologies (FinTech), with the aim of collecting operators' perspectives. The results of the inquiry also show that barriers to entry and innovation persist in the sector.
The AdC reiterates the importance of adopting measures aimed at removing unnecessary barriers to the entry and expansion of operators in Portugal, allowing the benefits of innovation and competition in this sector to be materialized for consumers.
The findings of the sector survey are particularly insightful: among 70 companies providing services in Portugal, 74% answered that they face barriers to market entry. Of this subset of companies, 64% mention the position of the incumbents or the existence of a closed ecosystem as barriers. A demanding, uncertain or unclear regulatory framework, besides the small size of the market, are among the main barriers to entry identified by firms.
Regarding the recommendations made in 2018 by the AdC within the scope of its Issues Paper on Technological Innovation and Competition in the Financial Sector, companies also found that some of the most important ones are not being implemented. This includes the mitigation of barriers to access to banking data and banking infrastructures (SICOI).
Other difficulties mentioned by firm in the inquiry include the delay in granting access to banking data and additional consent requirements.
With regard to access to SICOI, some companies expressly mentioned lengthy delays in banks’ response to requests, long deadlines for implementing access and fears that access may be hindered as a result of the conflict of interest inherent to banks when they are also an entity on which competitor firms dependent for access to an essential input.
In total, the AdC’s inquiry extended to 88 companies, 18 of which operate outside Portugal. The AdC enlarged the survey’s universe so as to allow companies which are not active in Portugal to convey their perception on conditions of entry in the market.  Some of these firms considered that access to banking data is difficult and that a demanding, unclear or uncertain regulatory framework is an obstacle.
In addition to the report on Monitoring Recommendations for the Financial System, the AdC has also published a two-pager summarizing the main issues mentioned here.

March 15, 2021