9DECEMBER 2022the internal costs for the verification process would be significantly larger than what is offered on the market. One of the partners with which Citadele develops their Fintech tools is D8 Corporation, which works in card data tokenisation. In this case, the main benefit of this partnership is the knowledge of individual engineers. In the changing field of cryptography, in which the amount of knowledge necessary increases year on year, it does not make sense for the bank to employ these engineers. At the same time, wishing to maintain its competitiveness, Citadele entrusts this specific field of knowledge to a partner who is an expert in the field. We also recommend this approach to other businesses who wish to take the digital development path. There is no need to reinvent the wheel, and Fintech companies are well-regulated enough that, after checking the respective licenses, you can securely collaborate on new innovations or the use of existing Fintech innovations in order to digitise your business. The PSD2 regulation opens even more options to work with Fintech businesses In autumn 2019, European Union member states began to apply regulatory technical standards for secure customer authentication and unified, secure and open communication between banks and businesses who wish to use the data available to banks. The standards were passed in accordance with the Revised Payment Services Directive, or PSD2. It is a regulation that is focused on financial services in the EU and states that payments must be secure, simple and effective. PSD2 gives bank customers two significant benefits. First, to see their bank balances elsewhere, not just through the online bank of a different bank, but also, for example, in an app or website. Second, this third-party app or site allows customers to make payments from their bank account. For businesses, this opens up the options for offering their customers tools developed by Fintech companies. For example, a company can introduce online invoices that customers receive by email and pay with a few clicks, rather than copying and pasting information from a PDF invoice. This also creates options for the development of new services which require statements from a customer's bank: online accounting systems, budget planners and so on. When looking more at the areas which are developing the fastest -- payment initiation -- we currently only see a small part of the potential options, but regardless we can already see a significant improvement in customer experience and business operations. Payment initiation has allowed for the creation of various tools, but e-commerce retailers are most enthusiastic about one tool: a plug-in in the online store that allows for instant payment by card or through the most popular online banks. For example, businesses previously had to approach each bank separately, sign an agreement, and integrate it, so it often took a long time for a site to be ready. Right now, there are several of these tools on the market allowing for one plug-in to complete instant integration and the option to accept the most popular payment methods. In this field, Citadele has also created its own Fintech tool, the Klix payment system, which allows customers to pay how and when they want. The path to innovation for Fintech partnersEach European country has its own regulators overseeing the implementation of PSD2. In Latvia, this is done by the Financial and Capital Market Commission. Each business that wants to create a tool based on a customer's bank data must take a specific route. And, when selecting a Fintech partner, they must check whether their potential partner meets these standards. If, for example, a Fintech company wishes to create an innovative, data-based financial service, they must comply with certain requirements. These are linked with, firstly, having sufficient capital and security, and they must pay for a license allowing them to operate anywhere in the EU. Secondly, they must provide a suitable infrastructure for storing data in compliance with certain security requirements for financial institutions. Thirdly, as the Financial and Capital Market Commission website states, in order for a business to be able to use financial services, To understand the potential that a partnership with a Fintech company could bring, each NOVEMBER 2022 8 company must be able to identify the business operations in which they will operate and be the most knowledgeable
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