In this post, we are not going to open up all of the requirements and potential implications of PSD2, but rather focus on the general catalyst effect that it is already having in the market. For further reading around PSD2 and what effects it has, we can recommend SEPA for Corporates dissection here.
PSD2 Mandates an Interface to Core Banking Services
The aim of this interface and more broadly framework, is to bring strong customer protection and efficient fraud prevention standards into play, but the effects on pushing financial institutions into adopt the philosophy around the API Economy may be much more significant than the framework might lead you to believe.
Financial Institutions Anticipating the API Economy
The change in acceptance and adoption of digital finance models, including these interfaces, but more fundamentally the allowing of third party service providers access to use core banking features, signals a change from proprietary siloed technology to a true ecosystem narrative. Let’s be very clear, this is not an altruistic effort on anyones part, however, it is an anticipated requirement for staying relevant in the global financial services market, which means exposing core banking services for specialists who can run their specialized services on top this global, highly regulated and maintenance heavy banking infrastructure.
A Global Shift - far Beyond the EU
In financial services, regulation and anticipation of regulation plays a significant role in long term strategy. The same characteristics in the market demand that ultimately manifest themselves also in new regulatory discussions and proposals, are what is is driving this shift from Asia the to the Americas.
What's The Bottom Line?
Burying your head in the sand as an option has decidedly been taken off the list of choices, at least mechanically speaking, and the bank as a platform has just started. The implications are also clear, the position of the bank is shifting. Similar to how telecom operators have seen their infrastructure be opened up, banks will find a new position as a core infrastructure provider and find new value chains to leverage in the open platform economy.