Backbase presents: The PSD2 Playbook
Financial institutions across Europe will soon be introduced to new banking industry regulations – a proposal for a revised directive on payment services in the internal market, better known as Payment Services Directive (PSD2).
But is PSD2 a threat to banks, or an opportunity?
This report highlights how a bank should prepare for PSD2, and how it can transform this banking industry regulation into an opportunity to become a leader in creating an open banking platform. The report highlights four important takeaways:
What is PSD2?
The PSD2 regulation is regarded by many as the single biggest change in the banking industry, as it will force banks to open their infrastructure to third parties. Many banks are concerned about this legislation, feeling exposed and under attack from new entrants, and positions customers in the driving seat.
The impact of PSD2 on banks
For a long time, many financial institutions fought to avoid legislative and technological
evolution by arguing that such changes would cost too much money, and would
increase security risks.
It’s difficult for traditional banks to come to terms with the idea of opening up to third parties. Yet, for those who want to survive and continue to prosper in this digital age, the need to restructure their organizations is imperative.
APIs as the answer to PSD2
If banks want to pursue this option, the time is now. The strategic choice would be to build a new, PSD2 global strategy, where banks focus on pursuing a ‘bank-as- a-platform’ strategy to enable third parties to build applications and services around the financial institution, based on open APIs; banks become a complete digital player, competing and collaborating for customer relevance in payment and information services.
The next step
There is no need to wait for the regulations to be final. PSD2 is going to happen and the technology selection processes and implementation can begin today.