Shouldn’t customers in Europe be “all in” for Open Banking, which promises to give them control over their data and open the door to much improved financial products and services? Instead, customers have been slow to embrace the Open era, fearing their data may be compromised. Financial services providers have their work cut out to persuade customers to cross this new frontier.
The Second Payment Services Directive, which transfers control of data from banks to customers, has created difficult questions that affected banks operating in Europe must answer if they want to maintain their competitive edge and hold onto their customers in an increasingly crowded financial marketplace. Fortunately ground-breaking cross-selling and loyalty programs allow banks to compete and win against shrewd third parties.
Open banking is set to send shockwaves through the UK’s banking industry in 2018. Consisting of the CMA’s open banking remedy and PSD2, the initiative will make it possible for financial institutions to share financial transactional data with third parties online, with the aim of improving people’s banking experience.
When it comes to something as highly regulated as the banking industry, open source may not be the obvious technology to choose. However, with the rise of Open Banking — which likely came about as an answer to what is probably the most often cited regulatory requirement for financial institutions
Until very recently, financial data pertaining to a customer’s account information was made available only to his/her own bank. But since January 13, those rules have changed.
Let’s start with the basics, The Second Payment Services Directive (PSD2) was officially published by the European Commission in December 2015 and follows on from the First Payment Services Directive (PSD1), which was implemented in 2009.
Introduced in 2015, PSD2 grants third party providers (TPPs) access to bank customers’ (both consumers and businesses) online account & payment services in a secure and regulated manner.
App developers are shooting ahead like missiles, struggling to outdo each other in the creativity department, and customers are loving them for it. But are banks keeping up, or have they been left out of the digital party, still struggling with outdated systems that simply “don’t do” technology all that well? 2017, characterized by the unexpected, is separating the serious contenders from the rest.
Change has become the key word for European Union banks, and the European Commission’s Revised Payment Services Directive, set to come into effect next January, promises to level the playing field for banks and fintechs as well as uphold consumer rights, while also possibly changing the face of traditional European banking beyond recognition. How are banks coping with the challenges and demands of the PSD2?
You may have come across “RTS” – yet another acronym in the jargon-riddled PSD2 legislation. The European Commission has set out the legislative framework for new Directive and has tasked the European Banking Authority (EBA) to define the Regulatory Technical Standards (RTS) for the implementation for PSD2.