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Online banking access soon guaranteed for EU citizens

Finland has followed the European Union’s lead and reformed its laws to grant citizens the universal right to open a bank account and receive online banking access codes, regardless of their place of residence in the union. How the change, which will come into effect on 1 January 2017, will affect foreigners from outside the EU's access to bank services in Finland remains to be seen.

Sampo Pankin avainlukulista on tietokoneen näppäimistön päällä.
Image: Yle

A law change that will come into effect at the turn of the year will provide all EU citizens with the right to have access to a basic bank account and online banking codes.

The reform will also prohibit banks from refusing to issue online banking codes to people with a bad credit history. People with disabilities will also be provided with better opportunities to receive an account and bank codes in future.

The change to Finnish law is in line with a new European Union directive that similarly gives access to basic bank services to all EU citizens. A person residing in the union will now have the right to open a bank account in any EU bank. The only valid reason a bank can offer for refusing to open an account in future will be previous charges of money laundering, suspected links to terrorist financing or active sanctions.

Access codes necessary for many online services

In a fact sheet, the European Commission explains the background of the directive as follows:

“Access to a payment account has become a precondition for participating fully in the economic and social life of a modern society, given that the use of cash is rapidly decreasing. In today's world, not having access to a payment account makes everyday life difficult and more expensive.”

Armi Taipale, legislative counsellor at Finland’s Finance Ministry, says that only a proper ID should be necessary to receive these services in Finnish banks in the future.

“If a first-time customer can present valid proof of their identity - a passport or an approved ID card - then in principle, there should be no obstacle to opening an account,” she says.

The law change will affect consumers only, not businesses.

Banks rake in service fees

Finland’s Guarantee Foundation (Takuu Säätiö) specializes in providing assistance to private persons struggling with debt and payment problems. The legal reform will change things for many of their customers who had previously been denied online access codes because of bad credit. The lack of codes often prohibited them from using banking, tax administration or even health and social services online.

Foundation CEO Juha Pantzar says the role of the banks in the online registration process is actually a bit problematic. 

“More and more public services now require digital authentication to access their online services. This raises the question of who is responsible for paying the service costs. Using a photo ID only requires a one-time payment to obtain the card or passport, while the use of bank access codes incurs a surprisingly sizable fee each time they are used,” he says.

When it comes to public services, for example, the municipalities in question or the state have to pay the banks the service fees for each authentication transaction.

As an alternative, his organisation has favoured using the TUPAS identification system. Developed by the Federation of Finnish Financial Services, TUPAS relies on a selection of passwords, chip cards or fingerprints to verify people’s identities. It is valid at all major Finnish banks, in addition to the social benefits administrator Kela and the tax administration.

E-invoice data exchanged between banks

The legal reform will also make it easier for customers to switch banks if they wish. After the first of the year, the banks will be required to inform senders of e-invoices about the payment information of their customers.

“Competition between the banks is likely to pick up speed because of this,” says the ministry’s Taipale.

“Of course the customer must notify their bank if they are transferring their accounts elsewhere, and inform the bank of their new banking information. This means that customers will still have to be active and make sure that the invoicing data has been received at their new bank,” she says.

The new law is also expected to make it easier to compare service fees among the different banks in Finland, as the country’s Financial Supervisory Authority has been charged with creating a website that would serve this purpose.

Foreigners' status unknown

Finland’s banks have notoriously varied approaches to serving foreigners from outside the EU, as Yle News stories from 2014 and 2015 report.

The 2014 article says that accessing banking services is most difficult for foreigners in Finland who do not have a passport from their former homeland. In cases in which a person's identity cannot be confirmed, he or she is issued an alien's passport or a refugee travel document. Banks vary greatly in their acceptance of these kinds of identity documents, and authorities recommend that foreign nationals shop around from bank to bank until they find a financial institution that is willing to help.

Finnish law says all foreign persons have the right to basic banking services, but several foreigners have lodged complaints that they have not been granted online banking access codes.

For example, the 2015 article states that on 15 December 2015, the National Discrimination Tribunal ruled that OP bank discriminated against a customer when it refused to grant access codes because he didn’t provide Finnish identity documents. This was after it had accepted his US passport as valid identification to open up a bank account. In a previous decision, S-Bank was found to have similarly discriminated against an Estonian whose passport was rejected.

How this new law will affect the bank services of people from outside the EU in future is still unclear.

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