Retail financial services and their distribution across borders

One of the priorities of the European Commission is to have a solid, well integrated and equitable market. Economic development raises a number of questions for the consumer: where we keep our money, how we save for old age, how to buy a house or other properties, how to ensure ourselves or how we ensure our properties in case of health problems or accidents. The development of effective European markets for these services will increase consumer choices, will successfully enable providers to offer their services throughout the EU and will support new market actors and innovation. Only a small part of retail financial services purchases is carried out across borders.

The digitalization process is a support for the consumer - developing new business models and services through technology; facilitating access to information for potential consumers, reducing the time spent in finding the best product. We can therefore talk about strengthening customer confidence, making products simple and easy to understand and establishing general comfort as a result of investment protection and free movement of goods. An improved retail financial services market would also create new market opportunities for suppliers, supporting economic growth for European countries and create new jobs.

A short analysis of the current state of cross-border retail financial services markets identifies a few issues:

• Fragmented markets and insufficient competition
• Limited cross-border activity
• Differences in price and options
• Insufficient competition and minimum use by consumers of the possibility to switch to other products

These issues are caused by the degree of conservatism of customers that do not trust the new products or do not know of their existence.
Through online systems and the specific applications of internet banking, financial services companies increasingly offer optimized products based on customer needs. All these technological improvements lead to rapid access and facilitate access to cross-border operations, which is more effective for consumers and improves comparability of products/services.

Thus we can identify the following:

• New trends with new players and new techniques in a digital market. There are new business models: exclusively online suppliers are entering on the market and technology firms providing services (within Member States and sometimes across borders) such as wire transfers, electronic wallet agencies, online payments, aggregating financial data, funding from person to person (P2P) and price comparisons. Also new players that enter the market will not only be financial service providers, for example, an online site selling products will distribute financial products. These new technologies can be beneficial to consumers but only if relevant safety standards will be maintained. 
• Development of exclusive online distribution channels.
• New financial and payment products. Some examples: Bitcoin currency, payments via SMS, virtual wallet, mobile phone payments, wireless technologies, from person to person lending platforms crowdfunding. Payments from mobile devices is growing at an accelerated rate, market participants, including banks, card systems, mobile operators and players in the internet sector currently offer a wide range of solutions for remote payments or payments proximity. These services include payments from person to person (P2P), mobile wallets, mobile banking and virtual cards application and use different technologies, the most advanced payments through POS (point-of-sale) being the codes NFC (Near-Field Communications) and QR (Quick-Response).
• Better products with more options and more opportunities. The main advantage would be for the customer due to greater competition and reduced barriers to cross-border marketing.

Deployment and expansion of cross-border distribution solutions include:

• Consumer support in their effort of buying financial products across borders. Consumers should be able to know what products are available in other EU countries to benefit from competitively priced products that meet their needs and to trust that the products they are buying are safe and appropriate and that they will meet their expectations. Few retail financial service providers are targeting consumers from Member States where they are not physically established. In addition, consumers face a number of obstacles, including language, if they want information on products from other Member States.
• Better information and support for consumers for switching to other products. Delivery channels, product comparison sites with specific indicators not just those on the price, giving up the product without subjecting onerous sanctions.
• Addressing complex and exorbitant fees for foreign transactions. Ex: exchange rate for card payments for different currencies.
• Access to financial services in any part of Europe.
• Increased portability of products and here we refer in particular to life insurance.
• Facilitate access to professional indemnity insurance and its recognition across borders.
• Building confidence in order to benefit from opportunities in other European countries.
• Encouraging comparability and understanding of consumers through better communication of the information transmitted. Such information must be clear, easy to understand, must take into account customer behavior.
• Encouraging comparability and understanding of consumers through better communication of information. The existence of ways of resolving any disputes. 
• Improving legal remedies regarding retail financial services.
• Protection of victims where auto insurers are insolvent.
• Increase the transparency and comparability of auxiliary insurance 
• Promoting electronic signature and identity verification 
• Helping companies to better exploit digitization 
• Converged procedures for individual insolvency, property evaluation and collateral execution.

Despite the efforts of the European Commission, in order to gain easy access to these products, there must be involvement and availability from customers in order to access the information and get high quality financial education.