Nina Stoyanova from Bulgarian National Bank Says Digital Technologies have Improved the Financial Services and Payments Sector

Nina Stoyanova, Deputy Governor and Head of the Banking Department of the Bulgarian National Bank, has noted that digital technologies have significantly changed the financial services provision business, and the payment sector is “the leader in this trend.”

Stoyanova notes that the overall speed of development of these innovations and the “scale of technological changes” in it require a “concrete and targeted effort.” She also mentioned that the “pending strategic projects” and “directions of development” of the European payment infrastructure in the short-term (as presented in the digital finance package of the European Commission of November 2020) are related to the ongoing development of instant payments, digitalization of financial services and also the “support of secure, profitable and interoperable payment solutions within the single market.”

While commenting on the upcoming review of the Second Payment Services Directive (expected this year), Stoyanova confirmed that there will be a review of the Second Payment Services Directive or PSD2 (adopted in 2015 and added to the national legislation at the beginning of 2018 with the new Law on Payment Services and Payment Systems).

Stoyanova, whose comments are part of the Quarterly Bulletin of the Association of Banks in Bulgaria, issue 65, January 2021, pointed out that updating the requirements to technical solutions used by payment services providers for strong customer authentication (SCA) should ensure a “high level of security to customers.”

These updates should also make the process more “convenient” and “user-friendly,” Stoyanova added.

She also noted:

“Emphasis will be placed on the so-called ‘nontransmittable’ elements, such as biometrics. This presupposes gradual decrease in the use of elements with lower degree of security, such as static passwords, and limiting the use of older technologies and communication channels that are prone to attacks (such as SMS text messages).”

While commenting on the general trends in payments digitalization, Stoyanova added that  “amendments to the legislation are an important prerequisite for the quick take-up of innovations in the market, but no less contribution to it have the standardization activities pursued by the industry itself.” She further noted that the main developments, trends and technologies in the payment area (and the required regulatory activities) will be covering the “standardization and achievement of interoperability between end-user applications used for payment transactions, including standardization of the QR codes used in Europe.”

Going on to discuss how we can try to eliminate the fragmentation of the digital market services, she pointed out that there are ongoing “legislative changes aimed at creating opportunities for interoperable use of digital identity throughout the European Union.” She believes that this will  “allow easy ‘onboarding’ of new customers entirely online, in full compliance with the requirements for combating money laundering and terrorist financing.”

Stoyanova continued:

“Regulation of activities with cryptocurrencies and financial instruments based on tokens [may be carried out by] introducing a comprehensive regulatory framework by 2024, allowing the implementation in the financial service sector of distributed ledger technology (DLT) and cryptocurrencies, taking into account the related risks.”

She further noted:

“[When] promoting innovation based on financial data, [we could] create a common space for financial data [in order to] facilitate digital access to legally required financial information disclosed by financial institutions through standardized and machine-readable formats.”

(Note: You can check out here full speech here.)

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