IBS Journal January 2018
31
if they have a licence in their home country. What about the “competition” – the payments industry and its providers ready to tackle integration with consumer data? “The industry has made great progress towards a more open and frictionless environment, which is encouraging to see when we consider the significance of
“ Prudent risk management
can be the differentiating factor that determines success
regulatory change to come,” says Brian Lawlor, director of sales and business development at Wirecard. “The industry has worked closely together and consistently shown a united front … whether running workshops or communicating papers – to make clear what’s expected from organisations post PSD2 and subsequent impacts on consumers and businesses as a result.”
Pretty fly for an API
Connecting to APIs will be the main vector through which third- party firms will be able to gather and use customer data. By using APIs, non-banks will be able to completely circumnavigate the regulatory and compliance processes that usually bog down a financial institution. Combine this and the single-licence needs, and it seems like traditional players are getting a bum deal.
Lenders are being caught between a rock and a hard place, at risk of being relegated to the background noise of their customers’
lives. Consider Apple Pay, Samsung Pay and Android Pay. These products, consumer-driven and revolutionary to users, were allowed to be bolted on top of most major banks (at least in the UK) without a whimper. When someone pays with their smartwatch, phone or NFC-enabled wearable, do they think “I’m paying with my bank” or do they think “I’m paying with Apple/ Android/Samsung”? On the release of these services a prominent CIO at a major European bank told me that the widespread adoption by banks was tantamount to “Stockholm syndrome”. There were only a few cases where the banks stood up for themselves – like the long-running fight between Apple and a set of Australian FIs over the use of Apple’s proprietary NFC technology.
Take that payments microcosm – as much as it can be called one – and then expand it to include every single aspect of the financial services industry. “Next year you won’t have to be a bank to deliver financial services,” says Louise Beaumont, Co-Chair of the Open Bank Working Group and strategic advisor at Publicis. Sapient.
She also believes that banks are so unprepared for the change that something like PSD2 brings, they’ll be happy to open up their APIs and let the fintechs have at it. “It’s a way of siphoning information out without disruption. One the core lines of the sales pitch of API providers is that they can just smooth their offerings over the top.” At the end of the day, she adds, “it might make you compliant, but it doesn’t make you good”.
“Many banks have deployed the tactics of patching up their ecosystems, adding layer upon layer of middleware and overlay solutions,” agrees Blampied. “This may have short term cost
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