Europe's 28th Regime: Can It Unlock Fintech Growth?
Alejandro MartÃnez ·
Listen to this article~3 min
Alexandre Prot of Qonto explains why Europe's single market falls short for fintechs and how the proposed 28th regime could fix it by creating a unified regulatory framework across all 27 EU countries.
### The Gap Between Promise and Reality
Alexandre Prot, CEO of Qonto, has a front-row seat to the challenges of scaling a fintech across Europe. His company operates in multiple EU countries, and he's seen firsthand how the single market's promise doesn't always match up with what happens on the ground.
In theory, the European passport lets a company with a license in one country operate across the bloc. For basic services, like offering French IBANs to German customers, it works fine. But when you try to go deeper, things get messy.
### Real-World Frictions: IBANs, KYC, and Delays
Here are the main obstacles fintechs face:
- **Local IBANs:** To offer a German IBAN to a German customer, you need a branch license from BaFin, Germany's financial regulator. The process can take six months or more. Multiply that by 27 countries, and the cost in time and resources is huge.
- **KYC Differences:** Each country has its own rules for verifying customers. Germany requires live video identification for certain services, while France and Italy accept other methods. This forces fintechs to maintain separate onboarding systems, adding costs without any benefit to the user.
### The 28th Regime: A Simple Idea with Political Hurdles
This is where the 28th regime comes in. The idea is to create a unified regulatory framework that companies can choose to follow instead of 27 different national laws. It would be an optional layer, letting fintechs operate across Europe without dealing with each country's rules.
It's a smart solution, but it faces political resistance. National governments don't want to give up control. Still, the need is clear. As one expert put it:
> "The single market is a great idea on paper, but the paperwork makes it a nightmare."
### What This Means for the US Market
For US professionals watching European payments news, this matters. If Europe can pull off the 28th regime, it could create a more competitive environment for fintechs. That means faster innovation and better services for businesses on both sides of the Atlantic.
Companies like wero and other European payment systems are already pushing for change. The question is whether regulators will move fast enough to keep up with the industry.
### The Bottom Line
The 28th regime isn't a cure-all, but it's a step in the right direction. Without it, European fintechs will keep struggling to scale, and the continent will fall further behind the US and China. For now, the ball is in the politicians' court.