PSD2, simply put, is a regulatory directive in the EU that, among other things, requires banks to share their customers’ data. This is intended to be a boon for third party providers of things like PFM services, budgeting tools, payment services to challenge the card networks, and other financial services. Banks in the EU are also looking at this as a release from regulatory requirements around customer data privacy and allows them to also play in the game and access data from other financial institutions including their competitors. International Business Times wrote about Citi’s recent Digital Money Symposium where the topics around PSD2 were discussed:
Speaking at Citi’s recent Digital Money Symposium, Ruth Wandhofer, Citi, global head regulatory strategy, said: “Banks are actually saying – ‘oh, so I am encouraged to use my customers’ data and do something with it, and think about interesting, innovative value-add solutions for my own customers that all these years I thought I couldn’t do because of data protection issues.’
Also on Citi’s PSD2 panel, Eric Tak, ING, global head of ING’s Payments Centre, said: “Although huge opportunities will come about, if I were a third party and were actually also initiating some real innovative services ourselves, outside the ING organisation, it’s not as easy to build your proposition on this because the actual data you might get from different banks, the history about it, might be different.
The purpose of PSD2 was to encourage third party fintech organizations to develop new technology, bring greater innovation and challenge incumbent providers. Will it instead give established financial institutions the green light to be innovative themselves? Certainly worth keeping an eye on for further development.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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