PSD2 What SHOULD It Stand For?

PSD2 What SHOULD It Stand For?

Bernd Richter

Partner at Capco

Views 678

PSD2 What SHOULD It Stand For?

05.04.2016 12:15 pm

“Perfect Storm Digital 2”, “Premier Service Driver 2”, “Paradigm Shift Dynamic 2”? OK, they may never catch on as advertising slogans. But they all go some way to capturing the sense of excitement and opportunity that should be at the heart of how the European finance industry views and prepares for PSD2. For this is, emphaticallynot just another piece of regulatory process. Viewed from the right perspective, it is not even a “threat” to heartland retail banking payments and account data supremacy. So what is it then? Let’s take a closer look at each alternative definition.

“Perfect Storm Digital 2” applies because PSD2 is creating a context where banks have to look again at their payments functions and even at the very heart of their relationship with their customers: the account data that they hold. Soon, any previous “exclusivity” will be finally removed. They will not be able to trade on a safe assumption that the status quo can continue unchallenged. New opportunities will need to be identified and implemented – the only way to prevent PSD2 from becoming a threat.

“Premier Service Driver 2” is relevant because retail banks now have a huge opportunity to leverage their proven experience in high volume, trusted financial data handling to create new and highly innovative service offers. Here they have a series of unique advantages, when compared to “non-traditional” newcomers to the industry and so-called “disruptive” players. They have brand profile. They have familiarity and trust. They have extensive infrastructure that they very likely understand far better than any potential competitor. Very quickly, their advantages of today can be combined with technologies of tomorrow (and not some far off horizon, but a few months at the most) to create a range of personal finance data driven portals and services. These will offer benefits to banked consumers across a range of activities, from scanning available utilities savings in real time to making the best choice of bank account.

“Paradigm Shift Dynamic 2” works because, even though we all know that “paradigm shift” is an over-used term, this really is a profound potential change in the status of retail banks and their approach to data and payments handling. Thanks to the API-based technologies, banks can move from the “bookkeeping paradigm” – simply holding data and enabling transactions – to a truly proactive role. In this role, they can put the customer’s own data to work for them to pursue savings, efficiencies and better deals, literally while they sleep.

Is this all just too “visionary”? No! Must we wake up from the dream and decide that PSD2 should stand – and only stand - for Payments Services Directive 2, after all? Not really. Every development referenced in this blog could be feasible pretty much immediately. How?

Banks have the opportunity to belong to and benefit from a new digital ecosystem that enables them to collaborate with a broad range of retailers, utilities providers and others, to create innovative customer offers. And they don’t have to undertake the heavy burdens of “ground up” technology development either. A whole community of fintech experts is ready to offer specialist support. Even the core API technologies can be leased.

The time for banks to get involved is now. The one alternative PSD2 definition they cannot afford is this: “Procrastinate Strategically, Disintermediated 2-morrow!”

Latest blogs

N/A ReliaMax

College Dreams? Here’s How to Get Accepted

Higher education in the United States is not just about getting accepted, it is about where you get accepted. Sure, there are options, there are seemingly endless options - from community colleges to Ivy League schools and everything in between. The Read more »

Bobby Gill GCWealth

Bobby Gill: 3 Ways Fintech is Helping Small Businesses During the Pandemic

Image Source: Pixabay. Back in April, the US oil prices sank to a 20-year low. In the UK, road traffic levels hit a 70-year low. Worldwide, due to lockdown, retail, travel, and restaurant bookings have dropped by 85%. More than 430 million Read more »

Christa Ardley Bitstocks

Bitcoin and blockchain without the b******t

An industry once viewed by the general populace as a haven for criminals and online scammers, and still somewhat marred by fractious in-fighting, Bitcoin and blockchain are gradually casting off their outdated negative reputation; as the focus Read more »

Otabek Nuritdinov Safenetpay

Beyond Payments Services

    Why it really matters for small for medium-sized enterprise (SMEs) to choose the right payments services provider. Strategic planners in the financial services sector often define their business in terms of products that Read more »

Chak Kolli DXC Technology

How Can Insurers Realise the True Value of AI?

As Artificial Intelligence (AI) and digital transformation find their way into every aspect of our daily lives, we are gradually seeing changes taking place in different sectors. Progressively, AI is permeating the insurance value chain and it is Read more »

Related Blogs

Arta Sylejmani Gemalto

Building a Trust Loop: How banks can transform their relationship with the customer

Today’s consumers expect a frictionless customer journey, regardless of whether they are shopping online, applying for a mortgage or opening a new bank account. Delivering such a seamless customer experience will require banks to not only boost Read more »

Danny Healy MuleSoft

PSD2 Deadline Tomorrow - How Should Banks Respond?

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 Read more »

Anna Tsyupko Paybase

If you have a gig/sharing economy business or online marketplace, there has been a big change in legislation that you need to know about

Changes to the commercial agent exemption require action, but they will bring benefits to all involved You may not have heard of the ‘commercial agent exemption', but if you have an online marketplace or gig/sharing economy business, you may have Read more »

Nick England EasyFX

PSD2: The Honeymoon Period

PSD2 has been one of the most fiercely debated payments topics of recent times. Will this be the death of traditional banks? Will consumers get a better deal when it comes to financial products? Are FinTech’s going to take over? Read more »

Maikki Frisk Mobey Forum

Come Together - Partnerships in the Post-PSD2 Era

When PSD2 comes into effect in 2018, the unprecedented regulatory upheaval will compel banks to explore new business models, commercial strategies and operational practices. In the open banking era, collaboration will be key as banks move to employ Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel