Banks in the EU will gradually face rising funding costs due to customer turnover as the EU's second payment services directive allows for better consumer choice, according to Moody's.
The directive requires banks to allow customer data to be shared with authorized third parties, and is set to trigger new competition for established banks from financial technology services, reducing banks' stable funding sources such as from retail deposits.
Over time, the sharing of customer data will lower cross-selling opportunities for banks, Moody's noted.
It added that although the directive is credit negative for established banks, the regulation has "not yet triggered large-scale displacement."
