France

According to Merchant Machine, 90% of French had access to the internet in 2021. Of all French using the internet,  73% used the internet for online banking in 2019, which was 7% above the EU average. France ranks 20th in the integration of digital technologies and 15th for digital public services among EU countries.

France falls under the PSD2 legislation and has adopted STET standard. PSD2 is a European Directive that regulates electronic payment services and was implemented in all EEA countries in 2016 and went live in September 2019.

In their European Open Banking league, Yapily ranked France 4 out of 18. France has been steadily embracing Open Banking and digital payments since the inception of PSD2 in 2018. While the STET framework is used throughout France for Open Banking, it can have different interpretations by banks, which has led to discrepancies in implementation. Yapily states that on the whole, feature coverage is good, but there are limitations. France’s legislative framework is quite complicated and has a strong focus on AML (anti-money laundering). Therefore, Yapily suggests that in order to support the adoption of Open Banking, regulators could provide more guidance to firms on how best to meet legislative requirements. Currently, firms in France have to meet quite strict regulatory requirements in order to be authorised, these are not always proportionate to the risk profile of a company. 

Yapily states as France’s Open Banking landscape continues to mature, it should look to implement a similar entity to the UK Open Banking Implementation Entity (OBIE) to ensure banks adopt new regulatory frameworks at pace. Limited supervisory powers given to the Autorité de Contrôle Prudentiel et de Résolution (ACPR) means that regulatory monitoring and enforcement are still done at the EU level. To continue to accelerate Open Banking and make it easier for the Third-Party Providers (TPPs) to seamlessly integrate with multiple banks in the region, France will need to prioritise standardisation and collaboration going forwards.

The EU Commission has announced its intention to adopt an Open Finance regulatory framework.

While the STET framework is used throughout France for Open Banking, it can have different interpretations by banks, which has led to discrepancies in implementation. Yapily states that on the whole, feature coverage is good, but there are limitations.

The Banque de France states that the openness of the market could be improved, as the new service providers tend to remain dependent on traditional institutions, and most French Fintechs only address the French market.

The Banque of France has been experimenting with a wholesale Central Bank Digital Currency (CBDC) idea, thinking this would avoid fragmentation of settlement assets which the increased use of tokenisation of financial assets will bring and improve security and interoperability across several CBDC countries.

According to The Global Findex Database, 99% of French had bank accounts in 2021. French consumers are particularly interested in the benefits that Open Banking payment initiation services can provide. In a recent study researching the Open Banking adoption among consumers, 33% of French consumers were interested in receiving intelligent assistance to manage payments, and 31% were interested in having their data used to develop convenient new payment methods.

According to Yapily, to support the adoption of Open Banking, regulators could provide more guidance to firms on how best to meet legislative requirements. Currently, firms in France have to meet quite strict regulatory requirements in order to be authorised, these are not always proportionate to the risk profile of a company.

387 Fintechs operated in France at the end of 2020.

The Banque de France announced in 2022 that there had been rapid growth in the Fintech market following the PSD2 directive, with more than half of the 62 electronic money institutions and payment institutions currently in operation licensed after 2018; the number of agents registered with the ACPR had risen by more than 40% in one year, with almost 3,300 decisions to register agents in 2021. According to the Banque de France, the creation of the payment service or electronic money service provider status has fostered the emergence of an Open Banking ecosystem. The introduction of an agent status has also contributed to this process by creating a gradual – proportionate – regulatory framework: it thus allows emerging players to test the suitability of their services with the market under the aegis of a licensed institution before applying for a license themselves.

France ranks 12th in human capital among EU countries in the Digital Economy and Society Index (DESI) 2022. The human capital measures digital skills, the proportion of employed people working as ICT specialists, female ICT specialists, and enterprises offering ICT training.

To create a more favourable regulatory environment for Fintech entities, the French financial regulators, the Financial Markets Authority (autorité des marchés financiers) and Prudential Control and Resolution Authority (Autorité de contrôle prudentiel et de résolution) have set up their own Fintech, Innovation and Competitiveness divisions.

France has adopted STET.