Competition concern as Irish banks attempt Revolut-style app   

KBC appears to have less control over Synch Payments project than others                  

Concerns about the huge market power wielded by AIB, Bank of Ireland, and Permanent TSB will be weighed by the Competition and Consumer Protection Commission (CCCP) as the lenders wait for a ruling on plans to set up a banking payments app to take on the likes of Revolut, a leading competition lawyer has said.

Ronan Dunne, head of EU and competition law at Philip Lee, said the competition regulator will carefully consider the changing circumstances caused by the exit of Ulster Bank and KBC, which further tightens the grip of the big lenders.

The result of an extended first-phase investigation into the app project by the CCCP may now not be completed before late July, Mr Dunne said.

Unusual competition watchdog ruling

Four banks initially notified the competition watchdog of their plans, on January 12, to set up a joint venture called Synch Payments to develop an industry-wide banking payments app. 

However, on January 21, that proposal was rejected, when the watchdog took the unusual step of ruling that the proposers had failed to provide it with sufficient information. 

On April 8, the watchdog said it had been re-notified by AIB, Bank of Ireland, PTSB, and KBC. 

KBC 'a non-notifying partner'

However, under the notification, AIB, Bank of Ireland, and PTSB — as well as the joint venture company Synch Payments — were identified as four so-called notifying parties. 

The Irish Examiner has established that KBC is a founding member of Synch Payments but does not have joint or equal control of the project, and is therefore not deemed as a notifying party. 

On May 19, the CCPC asked the notifying parties for further information.

Given the considerable market power that the big banks already wield in Ireland, there is considerable interest in the plans by the banks for a new app. 

'Any joint venture created by market participants where the market is highly concentrated — such as the banking market — will need to be considered in detail,' said leading competition lawyer Ronan Dunne.

Since the first application failed in January, the influence of AIB, Bank of Ireland, and PTSB has increased further, as they participate in the carve-up of the Ulster and KBC loan books. 

“Any joint venture created by market participants where the market is highly concentrated — such as the banking market — will need to be considered in detail. And that is particularly the case because of concerns from a merger control perspective or spillover effects,” Mr Dunne said.

Mr Dunne said that KBC appears not to have equal control in the joint venture and the rights are not equally shared between the four banks.           

He said it was difficult to say at this stage whether the CCPC will submit the payments app plan to a full, or phase 2, investigation.

The information submitted by the three banks and by Synch Payments over how they propose to deal with other financial institutions will likely be the focus of the CCPC, he said. 

This information could include the licensing agreements or fees they propose to charge others to participate in the app in the future.       

"The competition commission will pay particular focus to ensure that it is indeed possible to maintain competition and that it is sufficiently open and non-discriminatory so that it could be of interest to third party financial institutions, particularly those who want to access the Irish market," Mr Dunne said.