The second Payment Service Directive or revised Payment Service Directive, widely known as PSD2, is a European Nations (EU) Directive that has been composed by its member states. This order has been designed to manage payment services and its providers throughout the EU and European Economic Area.
Paul Riseborough shares his insights about PSD2:
Overall, how are banks responding to PSD2 following the January deadline for implementation? Are there any glitches or issues in transition?
Banks are certainly gearing up to support PSD2, however it’s disappointing that in the UK, not all the banks mandated to adopt the Open Banking initiative proposed by the Competition and Markets Authority, were ready to do so by the deadline.
In your opinion what are the future prospects of PSD2?
PSD2 is going to shake-up financial services and inject a new way of thinking into the sector… eventually. It is far from being a silver bullet. First, developers are going to have to figure out what to do with all the new data then this will need to be translated into a viable product. In the short-term it’s unlikely to have any massive ramifications, however in the long-term it’s likely to significantly transform the way the sector operates.
Some banks have started implementing the rules of PSD2, while others are yet to do so. Can you tell us why?
A lot of this is related back to legacy systems. We’re in a fortunate position at Metro Bank where we have a state-of-the-art tech stack. We’ve been able to work with global leaders like Apigee on designing our API platform, which gives us the ability to partner with organisations quickly and build compelling digital products and experiences for our fans. For some of the larger players, implementing PSD2 across their extensive systems is not so simple.
How can banks implement PSD2 in an organised manner?
PSD2 provides an opportunity to create sophisticated products that give consumers more control over their finances, as well as greater protection against fraud. In the long-term it’s going to be a game-changer, but to fully realise this, banks need to ensure they bring consumers along with them on this journey.
Consumers need to have trust in both the mechanisms and output of PSD2. By using consistent language and creating a clear set of standards that third party providers (TPPs) can access the data, banks and other fintechs can help build both understanding and confidence among consumers.
It’s still early days to understand the full impact of PSD2 – but are the trends in banks heading in a positive direction?
Absolutely. PSD2 is the right thing to do to encourage competition and improve quality, choice and service for both for consumers and businesses.
Paul Riseborough is Chief Commercial Officer at Metro Bank.
For more opinions on PSD2, check our upcoming May issue