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PSD2 PSD2: The regulators strike back
“I am retail banking, look upon my works ye mighty and despair!” Round the decay of that colossal wreck, boundless and bare, the lone and level sands of consumer data stretch far away
Senior Reporter Alex Hamilton
I
f it isn’t too hyperbolic a way to start this article, 2018 is set to be a year which will change the retail banking space forever. That is especially true when it comes to the
Revised Payments Service Directive, or PSD2. In short, it’s an EU directive that will enable bank customers, from both the retail and corporate side, to use third-party providers to manage their finances. Conceptualised in 2013 and ratified in late 2016, the time has come for governments across Europe to implement the legislation, with the deadline sitting smack dab in the middle of the month, 13 January.
Opinion on PSD2’s effects seems to swing from “business as usual” to a complete breaking up of the bank’s monopoly on customer data. Banks will no longer have just their fellow lenders to compete against, but the entire financial services ecosystem. PSD2 will introduce two new chess pieces to the banks’ playing board: Payment Initiation Service Providers (PISPs) and Account Information Service Providers (AISPs). Remember the name, they’ll be all banks can talk about through the year. AISPs can get access to a bank customer’s spending habits and account overview, while PISPs are far more proactive, and can initiate payments on behalf of the user. The latter is surely to bring the biggest competition to the banks – around 9% of payments revenue is expected to be lost to PISPs by 2020.
The overall response of Europe’s bankers to PSD2 has been an entirely expected shrug of uncertainty. According to PwC figures, 68% of bankers fear that PSD2 will cause them to lose control of the client interface, yet many of them remain unsure how to respond to the new directive. As a result, they adopted a defensive, risk-averse stance. “The lion’s share of the leg-work falls on the banks to open up their networks to both share data with and accept payment requests from third parties under the XS2A rule,” says Tristian Blampied, senior product manager at
Pelican. “However, it is now understood that the component defining how data will be shared - the Regulatory Technical Standards (RTS) - will not come into effect until around September 2019. This gives them a much-needed buffer in which to properly prepare their technology.”
The European Commission has designed PSD2 to encourage innovation and promote competition. In the words of Commissioner Jonathan Hill: “This legislation is a step towards a digital single market; it will benefit consumers and businesses, and help the economy grow.” A survey conducted by the Commission found that 80% of EU citizens wouldn’t purchase a financial product in another EU member state, with the main reason being that similar services existed in their home country. For a regulatory body that’s all about inclusion and unification of the market, that’s a worrying figure. The Commission is going all-out to enable a cross-border ecosystem, including allowing third-party apps the rights to operate in multiple geographies
www.ibsintelligence.com | © IBS Intelligence 2018
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