#PSD2FinishLine recently started trending on Twitter. As the country slowly grows in excitement throughout the month of November, with the C-word on the tip of their tongues and supermarkets vying for the best TV advert, banks look to the new year nervously. Even if they’re prepared. Even if they’ve got the architecture in place or have been through dozens of consultations with lawyers and made the relevant regulatory changes. Even if they’ve publicly declared that they’re excited for PSD2 and are fully embracing collaboration, there’s still a degree of nervousness as the next 10 weeks builds up to the 13th of January climax.
That unease should not come from being unprepared - indeed, most banks will be - but more for the ‘what happens next’. Some commentators call 2018 the start of the ‘banking revolution’ where the financial market broadens to allow new and emerging players access to consumers. The trouble with such grandiose labels is that they limit the impact of future events; revolutions should be granted in hindsight surely. PSD2 and its sister law of GDPR under the sweeping initiative of open, secure banking, promise to make 'something' happen next year that will be of 'some' use to banks. Or, in similarly vague terms, it may not. The financial sector may trundle on as before, where genuinely great front office third party providers are acquired or accelerated by banks. We may see a year fraught with authentication issues, where the theory of PSD2 comes up against practical problems and/or grey areas where regulation cannot be enforced.
Let’s also not forget that even though 2018 marks the start of PSD2 and collaborative open banking, it is often a misinformed assumption that the market will readily accept third party providers. The lack of trust in relatively unknown brands or badly functioning APIs, could see a reluctant consumer base slow to embracing open banking. After all, persuading the average consumer to relinquish access of their private banking to Facebook will inevitably encounter fierce resistance.
PSD2 on paper is the most significant shake up of banking since 2008, but let’s see how it goes before granting it that title.
If your thoughts on PSD2 are still unclear, here are some of our favourite articles on what PSD2 will mean for banks from the past 12 months.
Alara Basul provides some much needed clarity and a handy guide book to understanding PSD2 in plain English.
Martin James, Regional Vice President of DataStax, looks at the data challenges that the IT teams of banks will have to contend with in the run up to PSD2.
“For legacy applications – often based on mainframes – adding API access directly into these systems would be expensive, risky and involve all sorts of unknown scalability issues”
Co-head of Transaction Banking at Nordea, Erik Zingmark, discusses a changing game and changing players and ominously notes that “some banks will adapt and thrive, emerging strengthened. Others will die”
CTO of The Money Cloud, Huw Jenkins, talks AISPs and PISPs and how 2018 is the year that consumers take control of their own banking experience.
“Overwhelmingly, it is the customer that has the power. They can ask any service provider for any service, and they will get it. They can build their own bespoke suite of services and be the masters of all the accounts they survey, chopping and changing to find the best value at the click of a mouse, or swipe of a screen. It is a future that is tantalisingly close”
Alain Vansnick, Senior Vice President of TAS Group, looks at how the consumer culture of the Right-Now economy can be leveraged to save the banks from the worst of PSD2.