‘Mobile First’ will become ‘API First’ — PSD2: Changing banking as we know it

Abstract

Under PSD2 (the European Commission’s revised Directive on Payment Services), banks are required to open up access to account data to third parties at the request of customers. Additionally, the related GDPR (General Data Protection Regulation) requires banks to ensure the portability of their customer data. As PSD2 presents an entirely new legal structure for payments across the EU, its impact will be overwhelming. As we move towards open application programming interface (API) banking, PSD2 is expected to be a catalyst for unprecedented customer-oriented change: banks and FinTechs should leverage PSD2 opportunities and amend their operating, business and revenue models. In response to PSD2, banks face existential choices: to become mere ‘bare-bones’ utility providers or the ‘orchestrating hubs’ to facilitate customers, services, providers and payments. There will be new alliances with FinTechs to benefit from each other’s strengths and respond to changing customer demands in a unified European market. Market players that have the greatest control over their capital, customer touch-points and corporate agility will be successful.