EU directive opens up the financial services industry?

The new EU directive PSD2 gives new stakeholders access to perform services that banks have previously controlled. The directive gives fintech stakeholders a lot of leeway.

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“The realm of possibilities is wider than ever, and new players will likely take positions,” says Partner Rune Strømsnes of PwC.

“It is impossible to predict how this will evolve. It is not just about technology and user friendliness, it is also about regulations and not least the trust of customers,” says partner Rune Strømsnes at PwC

“Furthermore, no one knows who will win the race to offer the best services, and the banks have already taken steps to challenge the competition. The only thing we can say for sure is that the realm of possibilities is larger than ever before and brand new stakeholders will likely be taking positions,” says Strømsnes.

Must open up services
PSD2 is a revised payment services directive that entered into force in the EU on 13 January 2018. The purpose is to streamline the European payments market. In short, the banks must allow new services linked to third parties:

  • The banks must make payments from the customer’s account on behalf of third parties.
  • The banks must disclose information on the customer’s payment accounts to third parties.
  • The banks must provide a technical interface that enables secure communication with third parties.

Even if PSD2 enters into force in January 2018, many details remain unclarified. Customer authentication and communication between third parties and the bank are of decisive importance to the security of the payments, not to mention the division of responsibility between the parties if anything goes wrong. The directive does not describe in detail how this is to take place, and this has been left up to the regulatory technical standards (RTS), which are prepared by the European Banking Authority (EBA) and adopted by the EU. 

Not until 2019
“The new requirements for customer authentication and secure communication will most likely enter into force in the EU after the summer of 2019, but the banks must have an interface and test environment ready for testing in the first quarter of 2019,” says Strømsnes.

The directive also allows national adaptations, which means that a Norwegian model must be reviewed and adopted by the Norwegian Parliament (Stortinget).

Need to get started quickly
Even before the PSD2 is introduced, some banks are already preparing for the future. Several banks have or are about to adapt to “Open Banking”, which means that they open their interfaces (APIs) to third parties.

“Developments are taking place at lightning speed, and the vast majority of banks are still sitting on the fence. Our advice is that they acquire experience and start to adapt as quickly as possible,” says Strømsnes. 



Facts / The giants

There is uncertainty and apprehension about how large global companies with access to big customer data will deal with the new opportunities in the financial services industry:

  • Apple Pay has existed in the United States since 2014 and has many hundreds of millions of users in its home country and several countries in Europe. 

    In the autumn of 2017, Apple launched its solution in Sweden and Denmark in partnership with Nordea.

  • Amazon has a lending division that has issued loans of over USD 1.5 billion. Amazon also has a patent on one-click purchasing for e-commerce, a service that was implemented by Norwegian online shops in December 2017.
  • Facebook has a licence to provide payment services. Since 2015, Facebook Messenger has allowed payments between friends in the United States. In November 2017, the same opportunity became available in the UK, and Nordea launched its bill payment solution via Messenger in Norway at the same time.
  • Google has had a payment solution since 2008 that has gradually been expanded with new features. In October 2017, “Pay with Google” was launched, which aims to give users the ability to pay using their Google accounts across devices, platforms and user interfaces.