The New PSD2 Directive – Is It a Challenge or an Opportunity for Banks?

The new European directive on payment services known as PSD2, which brings a level of deregulation in providing payment services has come into effect in the Czech Republic in mid-January 2018. The revised directive on payment services was drafted by the European Commission already in 2013.

The main goals of the PSD2 are as follows:

  • Faster implementation of innovations in payment services and an increased effectiveness of the payment market,
  • To simplify the use of electronic payments and especially low-cost internet and mobile payments,
  • New security measures for decreasing risk in terms of payment security and the reinforcement of consumer rights and consumers’ increased awareness,
  • Non-discriminatory conditions for payment service providers, including the option for new players to enter the payment services market.

In short, PSD2 allows bank’s customers as well as consumers and companies to use third-parties to manage their finances. In the near future, it will be possible to use applications such as Facebook or Google to make payments, to carry out P2P transfers and to analyze one’s expenses. Banks are obligated to provide these third-parties with access to the accounts of their customers via an open API interface (if they are registered and the client gives consent). This allows the third-parties to build financial services based on data and infrastructure of banks. It will therefore not be a problem for any company to provide their clients with a payment portal to various banks without the need for direct communication between the client and the bank.

Many banks are apprehensive of this new legislature and feel threatened by new companies entering their market. Must the PSD2 be really viewed as a threat, however? Banks do not necessarily have to regard PSD2 as an obligatory regulation but could instead see PSD2 as an opportunity – a chance for banks to become providers of information on accounts at other banks as well as a payment portal to accounts at other banks. One must realize that banks already have an existing relationship with their clients and are also regarded with a certain level of credibility that a startup lacks. This is precisely the reason why PSD2 is a good weapon for healthy competition.

Let us imagine a situation where a client has an account at three different banks. Currently, this client must access his accounts through three different web or mobile banking applications. Let us now imagine that one of the banks becomes an account information provider and will also allow for payments to be made from the accounts at the two other banks. The moment this happens, the client will most likely lose interest in using the banking applications of the two other banks. Ultimately, the client will spend time in the applications of the bank with the most proactive approach to PSD2, time that the client would otherwise spend in the banking applications of other banks. The proactive bank thus gains access to the client’s data and his/her products at other banks and as a result will be able to better target the client with its own products. Apprehension from the PSD2 regulation can simply be transformed into big opportunities through a proactive approach.

About ARBES Technologies

ARBES Technologies, a leading Czech B2B supplier of unique information systems for banking, leasing, capital markets and consumer financing was founded in 1991. Through its 25 years of existence, ARBES Technologies has obtained vast experience in development, creation and support of software solutions and many leading banking and financing institutions in the Czech Republic and abroad are now using its solutions.

Contacts for Media:

Kamil Pittner, PR consultant, ARBES Technologies, +420 604 241 482, press@arbes.com