Technology continues to permeate our lives, creating new opportunities even in the financial industry, through the possibility of automating internal processes, creating new business models and providing fast, convenient and secure services, anywhere, at any times, with low costs, to meet the requirements of a new generation of customers. In recent years, European authorities have issued a significant number of regulations, with the aim of creating an integrated European market for finance and banking services. These initiatives emerged as a result of the need to update the legislation in order to meet current challenges, such as those generated by digitization, but also to increase the degree of financial inclusion at European Union level. The emergence of the new Payment Services Directive known under the abbreviation ‘PSD2’ was necessary to modernize the legislation from the evolution of technology, to create greater openness, transparency and competitiveness and to stimulate innovation in the area of financialbanking services.
The Directive’s influence cannot be overlooked. It eliminates the monopoly of European banks on customer’s banking data and fundamentally change the way of performing payment operations and accessing information about accounts, by opening the payment services market to new ‘actors’ generically called Third Party Providers (TPPs). Thus, banks are required to ensure the access of TPPs to their payment infrastructure and customer data through application programming interfaces (APIs), which can subsequently develop their information and payment services, but also other financial services to bank customers. Although it provides for the need to open customer databases to Fintech companies, the PSD2 Directive does not require a certain approach (common API or individual solutions), leaving the freedom of local regulatory bodies to adopt the most appropriate approach for the market it regulates.
By allowing Europeans banks to communicate more freely through the API, the PSD2 changes the entire industry. For both, the banks and customers, it is not only convenient, but also very beneficial. The directive influences the business model of banks and makes them think about the payment process and the added-value they can introduce to it. Testing the industry for competitiveness, PSD2, more importantly, tests the ability to innovate and collaborate between banks and third-party organizations with financial and technological companies. Such partnerships combine the strengths of both partners, making it easier for customers to conduct payment transactions. The combination of skills in the joint work of banks and third-party organizations not only accelerate the development of new concepts, but also make payments more convenient and efficient, which customers cannot but like. The PSD2 provides innovative banks with the opportunity to create cutting-edge mobile applications and provide excellent banking service that will satisfy the end consumers and encourage them to become a regular consumer. It also provides an opportunity for innovative banks and other financial and IT companies to create a symbiotic partnership with industry leaders, so that they can benefit from their large client bases and improve their technologies, methodologies and work processes.
The PSD2 influence brings European banks closer towards open banking standards. It’s a great equalizer, giving innovative banks and third party organizations equal opportunities to create services under their own brand that offer customers any financial services.