Name
Global FinTech Guide
Country _ Name
Portugal
SectionTitle
Online banking services
Body
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-Banking:  

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.

Introduction

Attitude of the country towards online-banking services

Neobanks operate in Portugal mainly via cross-border activity rather than authorised Portuguese institutions. At the end of 2021, Revolut notified the Bank of Portugal about their entrance in the Portuguese Market under the European Union Passport/free provision of services.

Several international players are operating in Portugal in the traditional areas of payments, money transfers and personal finance, such as Arcopay, Lydia, Ebury, Viva Wallet, Stock Republic, and Tink, among others.

Legal affairs

Obligations and requirements to provide online-banking services described above

To perform traditional banking services or payments services, the companies must be authorised with full banking licenses or payment services authorisations (see our answer to point 1) either operating digitally or otherwise. Alternatively, provided those companies are already authorised in another Member State of the EU, they will be able to operate in Portugal, either incorporating a branch or under the freedom of services, pursuant the EU passport framework. 

The banking license entitles the applicant to perform any of the following activities –

  • acceptance of deposits or other repayable funds;
  • lending, including the granting of guarantees and other commitments, financial leasing, and factoring;
  • payment services, as defined in Article 4 of the legal framework governing payment services and electronic money (transposing the PSD2);
  • issuing and administering other means of payment not covered by the foregoing point – e.g. paper cheques, paper travellers’ cheques and bankers’ drafts;
  • trading for own account or for account of customers in money market and foreign exchange instruments, financial futures and options, exchange and interest rate instruments, goods, and transferable securities;
  • participation in securities issuance and placement, and provision of related services;
  • money broking;
  • portfolio management and advice, safekeeping, and administration of securities;
  • portfolio management and advice in relation to other assets;
  • advice to undertakings on capital structure, corporate strategy and related questions and advice, as well as services relating to mergers and the purchase of undertakings;
  • dealings in precious metals and stones;
  • acquisition of holdings in companies;
  • insurance distribution;
credit reference services;
  • safe custody services;
  • leasing of movable property, under the terms authorised to financial leasing companies;
  • provision of the investment services and investment activities not covered by the preceding points;
  • issuance of electronic money; and
  • any other similar transactions not forbidden by law.
    • The CRD IV and the Legal Framework of the Credit Institutions and Financial Companies (Regime Geral das Instituições de Crédito e Sociedades Financeiras, hereinafter RGICSF) set forth the basic framework in relation to the licensing procedure and to the requirements of substance for authorisation. In general, applicants must satisfy the requirements of having an appropriate programme of operations and structural organisation, arrangements for the effective direction of the business, initial capital, and suitable shareholders and board members.

    The timeline for a license application is six (6) months. The minimum amount of initial capital of banking institutions is at EUR 17,500,000. The initial capital must be maintained over the credit institution’s lifetime, in accordance with Article 93 of Regulation (EU) No 575/2013, of the European Parliament and of the Council, of 26 June 2013, on prudential requirements for credit institutions and investment firms and amending regulation (EU) No 648/2012 (hereinafter, CRR), and for this purpose, it is common practice for the competent authorities to apply an additional individual risk-based buffer to the initial capital requirement. No regulatory fee must be paid to apply for the banking license.

    The use of APIs and other IT structure will be subject to information security and digital operational resilience requirements applicable to banks. BaaS will be subject to outsourcing of critical functions and data protection regulation.

    Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area

    Collaboration scenarios have focussed the attention of supervisory authorities to the outsourcing and cyber risk arising from the fragmentation of the value chain, so they need to be framed by robust contracts that establish appropriate mechanisms to mitigate and manage the inherent risks.

    Economic conditions

    Market size for online-banking services and biggest companies in this business area

    We were not able to find recent date, but online banking is generally used in Portugal and there are banks that operate almost exclusively online, such as Activo Bank.

    Additional comments regarding the economic situation for online-banking services or what FinTech’s must be aware of in this business area

    There are recent news on cooperation agreements between the more traditional banks and FinTechs – e.g. BEST with Raize in 2021 and BPI with Apple Pay.

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