The Bank of Cyprus is reportedly opposing the introduction of IRIS, an instant payment system that could lower transaction costs for consumers and businesses, despite support for the initiative from four other major lenders on the island. The bank’s position, according to industry sources, has raised questions about competition in Cyprus’ electronic payments market at a time when Europe is moving toward faster, more open and competitive payment systems.
Concerns Over Competition
The Bank of Cyprus’ position, has drawn particular scrutiny because of its involvement in JCC Payment Systems, which has long held a dominant position in the country’s electronic payments market.
JCC recently lost its contract to manage electronic payments for the Cypriot government following a yearslong dispute involving successive objections, highlighting the difficulties new competitors face in entering the market.
While banks have a legitimate right to protect their commercial interests, those interests cannot justify keeping markets closed to competition, obstructing innovation or preserving privileged market positions.
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Calls for Bank of Cyprus to Explain Its Position
The Cypriot government, the Central Bank of Cyprus and the country’s Commission for the Protection of Competition are being urged to closely examine the developments and ensure that powerful financial institutions cannot dictate the pace of technological modernization based on their own commercial interests.
The Bank of Cyprus is also facing calls to publicly explain its position on IRIS and the reasons for its reported opposition.
Major banks cannot invoke their importance to the financial system when seeking special privileges, only to disregard the responsibilities that come with that position when competition is at stake.
Cyprus needs a banking system that takes the lead in modernizing the economy, rather than treating every new competitive initiative as a threat.
The question is straightforward: Will the banking system serve the growth of the Cypriot economy, or will the economy be expected to adapt to the interests of its dominant banks?
Source: OT.gr