Source: Promo | Friday, 01.12.2017.| 10:58
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PSD2 and Open Banking – Opportunities openers

When we think about financial services, our association relates to banks. Traditional banks. Banks take care for this for centuries. No matter what modern channels we use – ATMs, online banking or mobile banking – it is still very likely, that there is traditional bank behind, taking care of these services. And PSD2 or in general open bankingjust might change this forever as it will be much easier for players out of banking industry (for instance Fin Tech, non-banks) to enter this till now highly fenced territory. There is no doubt, that these newcomers will play significant role in the future of financial landscape.

PSD2/Payments Services Directive 2 is the revised payments services directive with main goal todrive innovation, support increased competition and transparencyacross the whole Europeanpayments market. Banks will be obliged to enable TPPs (Third Party Providers) access to customer’s account (which is called XS2A), with his/her consent of course. What XS2A will mainly bring, is enablement of provisioning of entirely newtypes of service that are regulated underPSD2—third party paymentinitiation (provided by Payment InitiationService Providers or PISPs) and third partyaccount access (provided by AccountInformation Service Providers or AISPs.Some countries are in this context already going faster and further than PSD2 requires, like UK with its Open Banking.

There are disruptive impacts of PSD2 and open banking for banks. It is not as a threat of getting rid of banks’ “traditional rights”, it is not shortcut for new market players to get banking licence either.With API focused digital ecosystem for instance,banksshould see it as enormous field of opportunities – starting withthe opening them a chance to partners with the wholerange of complementary players etc. Within digital ecosystem, incumbent banks today still enjoy many powerful competitive advantages over new market entrants. What they have is trust, built-up brand profile and capabilities to properly handle and deal with tons of data. They have fault-proven and pre-existing architecture and infrastructure for that. But they simply need to take strategic decision on how far they want to go with open banking, what the strategic and technology implications of their chosen approach would be, and what challenges they would need to overcome in order to move ahead.

With Open APIs, also non-banks can have access to financial services without having headaches of dealing with compliance and regulatory, which banks are required to do. Third parties can initiate online payments to retailer, e-merchant or any other. Simplyand fully online from payer’s bank account. When properly utilizing this data, this is tremendous opportunity to provide completely new services based on extracted data and gathered information.

As PSD2 is probably one of the greatest opportunity and huge threat to the banking industry at the same time.It is however fully up to banks, if they will take “wait and see” approach, or will consider lessons learned from other industries. Within winners will be those, who will be the fastest in adopting a business model and future applications to API economy.

Why NF Innova?

NF Innova, member of New Frontier Group, is declared a market leader in IDC MarketScape 2017 with its iBanking solution, provides complete end-to-end support not only to bear with PSD2 and open banking opportunities, but to get step ahead with taking full advantage of its opportunities.

Independent of which strategic approach bank decides to follow, NFG provides full services and own products support to properly address open banking based strategic decisions: be it with enabling full digital branch, establishing new brand and deliver new revenue models or enabling white-labelling services via digital platform.
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