Tomorrow marks PSD2’s next deadline – the point by which banks must make their open APIs available for testing by payment and account information service providers. Danny Healy, financial technology evangelist at MuleSoft has thoughts on it. Danny leads a team that helps banks and fintechs alike make the most of the APIs they’re being compelled to expose under the legislation, and believes that the industry should be interpreting the next phase of PSD2 as an opportunity to differentiate themselves.
Banks are now required to have their APIs available for testing by authorised third-party service providers. While this PSD2 milestone will make a certain level of openness mandatory, banks should avoid the urge to simply check the PSD2 box and move on. Instead, they should see the mandate as an opportunity for competitive differentiation.
To differentiate themselves, banks need to design their APIs in a way that makes it easy for third parties to collaborate and partner with them to drive mutual gain. For example, a traditional bank could open up an API that allows fintech innovators to deliver new services that significantly enhance the online banking experience. This could drive greater customer satisfaction and loyalty for the bank, while giving fintechs access to a vast customer base.
These partnerships can be fostered by packaging up crucial business processes — like corporate travel, procurement to payment, or treasury management — as productised APIs in an application network. In this way, financial services organisations can use PSD2 to enable the discovery and reuse of one another’s capabilities to compose innovative new banking services.