Are EU regulations hurting the fight against fraud?

Do EU regulations have a negative impact on the fight against fraud?

I believe so, but not for the reason you might think of. Yes, data privacy regulations present a challenge, even though they’re more lenient when it comes to fraud prevention. But I want to shed light on a different angle. Consider the following:

• 2018 - GDPR coming into effect

• 2019 - PSD2 mandates PISPs and AISPs compatibility

• 2020 - PSD2 mandates Strong Customer Authentication (SCA)

• 2023 - new AML regulations coming into effect

• 2024 - APP liability shift regulations coming to force in the UK

• TBD - PSD3

And trust me, these are just the highlights.

The truth is that EU banks and Fintechs have been bombarded with new regulations to comply with for half a decade now, with no end in sight. Add to that the strategic threat to their licensing, it’s no wonder that all of their resources which are not devoted to growth, are put into compliance. In reality, the attention to operational financial losses like fraud has taken the back seat.

Just look at how many RegTech companies you have in Europe versus Fraud Management startups and you can see for yourself where money flows to. Alternatively, look at how much US-based fraud prevention companies are struggling with penetrating the EU market with their current offering.

Admittedly, Europe has always been a relatively low-fraud region, but I honestly wonder if that can truly last given the low investment in the space.