The introduction of the European Commission’s banking directive PSD2 both recognises the shift towards Open Banking and helps drive the change; with banks expected to share private financial data with third-party providers at the request of clients, the payments industry is entering a period of radical change. What are the implications for the financial landscape, and how are banks adapting to the revolution?
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.
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.
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.
On the worldwide web, the more players involved especially in a financial-payment transaction, the greater the risk that someone in the cyber circle will attempt to commit fraud. Europe’s new PSD2 promises to offer consumers many advantages, including greater choice in payments providers, but banks must simultaneously install advanced fraud-detection platforms that correspond in intensity with increased customer-centric flexibility and value.