Electronic Money Institutions (EMI) – Leading by Example?

Stewart Davies
Stewart Davies – Commercial Director SaaS, Europe, Temenos

Electronic Money Institutions (EMIs) are a relative newcomer to the financial services landscape – particularly in their visibility to the wider market. They are not banks but they are challenging banks in many ways, including their business model – but how are they driving this change?

Whether a new start up entity or an off-shoot of a traditional bank, successful EMI’s have agility at the centre of their businesses. This can be proposition development, DevOps or use of cloud technology. Examples of this in action include, quicker account onboarding, with fewer documents to process and without the need to physically attend a branch. An IBAN can be issued in a few steps and very quickly customers are able to send and receive payments.

What are the benefits of EMIs to consumers/to the market/competition?

EMIs now have the wider market recognition of not just being safe to use but in many respects leading the market – no longer known for niche products. As well as being commercial operations, they also need to follow strong governance standards. Examples of this leadership includes:

  • Lower costs to customers: With a lower and more agile cost base they can be more flexible, react to market feedback and maximise success. This is true for an EMI start-up that wants to use this platform as a proof point on the road to becoming a bank, or an FI that remains an EMI as part of its longer term strategy.
  • More tailored offers: Broadening the range of services available and so supporting a wider range of society.

EMI’s drive progress. They don’t spend millions on branches or local offices, offline acquiring, sponsorships or advertising. They are better known for fighting for new customers by innovation. EMIs enter the market with a vision to change banking through innovation. However, great visions need to be accompanied by robust IT foundations. A great example of this winning combination is Temenos and its newest customer in Italy, Flowe bank.

To go to market quickly, Flowe deployed Temenos Transact and Temenos Financial Crime Mitigation on Temenos SaaS, running on the Microsoft Azure public cloud. Despite the COVID-19 pandemic, Temenos completed a remote deployment in just five months. Flowe then onboarded 15,000 customers in the very first week of operations.

This is an example of EMIs flexibility and innovation. Instead of imposing their own, often far from ideal, solutions, they tend to adopt and adapt many differing options to provide customers with choice.


The European Banking Association (EBA) has published a report: “The Impact of Fintech on Payment Institutions’ and E-Money Institutions’ business models”.
The decline in cash transactions, particularly during the COVID-19 pandemic and the corresponding increase in the use of mobile phones has seen an increase in global payments revenues. The Report does not contain data showing the change in payment revenues that has occurred following the advent of Payment Systems Directive 2 (PSD2), but the upswing in the market is clear.

There has been a steep rise in the use of digital wallets, which the EBA calculates has added USD 40 billion to global payments revenues.

The Report identifies four major emerging trends:

  1. Customers are more likely to demand fast, cheap and easy, secure international payments. Business models are becoming more ‘customer-centric’ with a view to using customer data to tailor products to suit individual needs.
  2. The influx of newly-authorised players into the market is prompting firms to seek to expand their existing service offerings. These new entrants are also looking to move up the value chain by targeting SMEs.
  3. More individuals in the EU are using a mobile phone to access their accounts and internet banking is becoming increasingly popular with young and old. This allows new entrants to provide consumers more choice.
  4. The introduction of the General Data Protection Regulation (GDPR) and PSD2 puts the control of data into the hands of consumers. The result is that this has broken open the market to new entrants, who are now able utilise customer data that otherwise was the purview of large banks and institutions.


Banks still hold the whip hand for multiple products and sheer breadth of service. But, EMIs are becoming increasingly important in the payments space, and developments will take place quickly. However, as with all IT progress in these difficult times, digitisation and innovation hold the keys to success.


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Stewart Davies
Stewart Davies – Commercial Director SaaS, Europe, Temenos