PSD2: the road towards Open Banking in the EU

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On November 25th 2015, the European Union released the second Payment Services Directive (PSD2), a key part to the EU’s Digital Single Market priority. The legislation seeks to enhance the integration of the European market for electronic payments and competition between financial services providers.

It came into force on January 13th 2018, but implementation has been slow. PSD2 sets out security requirements for electronic payments and customer data, in line with the requirements of the EU regulation on data protection (GDPR) requirements, expands the role of the European Banking Authority and increases consumer rights.

It is accompanied by another piece of legislation, which caps transaction fees for card payments. Deloitte estimates that payments services account for almost a quarter of retail-banking revenue for European banks, or €128bn in 2015. Strategy&, a unit of the consultancy PwC, found that 68% of banks think that PDS2 will leave them in a weaker position.

Under PSD2, banks have to share their customers’ data with third parties on a dedicated Application Programming Interface (API). This has been hailed as the first step in a “slow-burn revolution” which will challenge banks’ dominance by helping third parties offer competitive financial products.

Some of the UK’s biggest current account providers HSBC, RBS, Santander, Barclays and the Bank of Ireland announced in December that they wouldn’t meet the January deadline. Nationwide followed their lead in January. The Competition and Markets Authority granted them extensions ranging from weeks to a year.

The EU Commission released Regulatory Technical Standards, which detail the rules European banks have to follow, on March 13th 2018. The deadline

Mainstream media have paid little attention to the issue. Only four months before the regulation came into force, the UK’s independent Consumer’s Association found that 92% of UK consumers were completely unaware of it.

In August 2016, when guidelines for PSD2’s implementation in the UK were released, the Guardian was wondering whether finance’s “Uber moment” was on the horizon. The day the law came into effect, the newspaper’s columnist Patrick Collins declared “Open Banking? I think I’ll keep my door shut,” referencing a negative report by NatWest.

We plan to talk to: 

  • Open Banking Ltd: The implementation entity created by the UK Markets and Competition Authority
    • Imran Gulamhuseinwala: Implementation Trustee
    • Alan Ainsworth: Head of Policy
  • Jason Bates: Founder of Monzo, a digital bank, and 11:FS, a digital banking consultancy.
  • Tink: A Swedish startup whose app lets consumers manage their finances across banks and accounts. A few European banks, the biggest one being Belgian BNP Paribas, have made deals to incorporate Tink’s technology in their mobile banking apps.
  • Banks: HSBC, RBS, NatWest, CYBG group
  • Software developers

Who do you think we should talk to? What other approaches/angles are worth investigating?


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