Four little letters bely the huge impact that PSD2 will set on the banking world. It spells a new era in how we perceive data whilst also encouraging (or dragging) the banking industry to fully embrace the brave, new digital world and all its benefits (and pitfalls).
Depending on who you talk to, PSD2 will lead to bank disintermediation, or third party aggregation, or simply, the best incumbent API takes the whole banking pot.
And you can't move for talk of PSD2 in the fintech discussion space, be that on Twitter and LinkedIn or the various fintech events of 2017. Third party paytechs as well as CMA9 bankers alike can all be heard muttering 'PSD2, PSD2, PSD2' under their breath.
The hype is, of course, justified.
This is an important piece of legislation for both consumer and industry but, when the dust settles on Sunday morning following the wild PSD2 parties of the night before, the payment professionals will look at each other with bleary eyes and ask, "What now for payments?"
Here's our two pennies' worth.
As the payment facilitation model is sweeping the globe, traditional merchant acquirers are worried about their own future and scrambling to come up with new technology and new distribution packages.
It has been well-documented that last year was the 50th anniversary of the first ATM installation in London. Tabloid newspapers across the world have speculated over the future of this self-service device, debating everything from integration with AI and robotics down to whether there really is a long-term future for these machines in our allegedly imminent cashless society.
Financial institutions have been burdened with four factors that have acted as, for lack of a better term, a blockade, in the race to solve the blockchain - participation, privacy, scale and interoperability. Until these issues are addressed, banks will need to find alternative solutions for efficient and high-speed payments between counterparties.
January will be a false dawn for PSD2. While the long awaited Regulatory Technical Standards that underpin PSD2 Access to Accounts will finally be ratified in October, there is still a lack of clarity around numerous areas of the Regulation making practical implementation near impossible.
2018 will be the year when cross-border Instant Payments start to materialise – in the Euro zone, at any rate. So far, banks that have launched SCT Inst initiatives have focused on their domestic markets, even though SCT Inst is a Euro-zone wide initiative. In 2018, we will see interoperability between CSMs start to emerge.