Much has been written about the revised Payment Services Directive, PSD2, and its impact on payments and banking in the EU. Some industry experts claim it will be the most transformative change to banking in 600 years. Bob’s Guide created a series of views expressed by several industry experts to get their take on the regulation’s impact, including the following:
Brian Gaynor, Executive Director, J.P. Morgan
PSD2 will provide an environment for new payment methods to emerge and grow across Europe. Not since the implementation of the euro currency has there been an opportunity to provide common payment methods across the EU, which to date have been localised and restricted by national boundaries. Many new initiatives will emerge based on the openness to initiate payments coupled with the availability of mobile and the emergence of instant payments. Only time will tell which of these emerging brands will become common standards across the EU.Gene Neyer, Head of Industry and Regulatory, D+H
PSD2 is ‘turning banking inside out’. Open access shifts control to the customer who will be able to pick and choose products and services from different banks and fintechs. This represents a definite sea change from today’s product centric model. Banks will be forced to consider their strengths and weaknesses and choose what they want to represent to their customers going forward – a superior producer (like Walmart) or a platform and a destination (like Amazon).
While the EU is racing towards a more open banking environment putting more fintech organizations on an even footing with chartered financial institutions, it’s interesting to compare that to news from the OCC in the U.S. The OCC highlighted concerns about the strategic risks that banks face from fintech and partnerships with these organizations to deliver new products. From the OCC:
Strategic risk remains elevated as banks make decisions to expand into new products or services or consider new delivery channels and continue merger and acquisition activity. Banks face competition from nonfinancial firms, including financial technology companies entering the traditional banking industry. This competition is causing changes in the way customers and financial institutions approach banking.
The full OCC report can be found here.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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