Financial technology (fintech) companies accuse the major banks of lobbying for European Union legislation to be diluted, including the revised Payment Services Directive (PSD2) being introduced next January, reports the Financial Times.
PSD2 promises to encourage greater competition among payment services providers (PSPs), by requiring banks to allow fintechs and other third parties to access the data of customers who authorise it. In return, fintechs would consent to greater regulation, particularly with regard to data protection.
However, the FT report suggests that the fine print of PSD2, now being finalised by the European Banking Authority (EBA), will allow banks to retain too much power. “If it goes ahead as currently written it will not create open banking as the law originally envisaged,” Sebastian Siemiatkowski, chief executive officer (CEO) of Swedish online payments company Klarna, told the paper.
“If it gets passed in its current form, some banks will comply but some will have issues and others will not exactly be perfect.”
Christian Ball, head of retail at consulting services group GFT commented: “The fear that banks are attempting to water down PSD2 is hypothetical at this stage – the standards expected later this month will give us a full picture of the fine print. However, whilst the banks are rightly hypersensitive to security and data breaches, a watered down version of the regulation just wouldn’t make sense.
“This regulation is more than just compliance – at its heart is the aim to increase competition. I have great sympathy for banks that have invested in customer systems over long periods, but the drum beat of innovation is radically changing this business model. Banks like BBVA and Fidor have already grasped what financial services provision looks like in a digital economy and are already reaping the benefits. Of course, it’s for individual banks to determine if they want to embrace that approach, but from my perspective, there is absolutely no doubt they should be looking much wider than PSD2 compliance.
“The banks need to view PSD2 as an opportunity – access to data is a two-way street. The forces that drive it – data as a commodity, digital disruption and technological innovation – will not be held back, so attempts to do so will be similar to King Canute’s command to stop the tide.”
Juniper Research, which predicts that spending worldwide via mobile wallets will rise by nearly one third this year to US$1.35 trillion, says that the implementation of PSD2 in Europe should “spur further competition within the European wallet space, with existing players poised to introduce additional services to complement their payment offerings.”