21 October 2017
Lu Zurawski


Lu Zurawski - ACI Worldwide

15Posts 61,345Views 38Comments

PSD2 and the Hokey-Cokey Conundrum.

26 February 2016  |  5031 views  |  4

I competed last week in a ‘Family Lip Synch Battle’, in a chalet on the Swiss-French border with a rendition of the Hokey Cokey, mimed in German. I now feel curiously qualified to comment on the UK’s position on the European Union.


The existential conundrum posed by das Hokey Kokey (“…in?, aus?, man schwenkes alles rum?”...) helped me analyse the relationship between HM Treasury’s Open Banking initiatives and the EU’s implementation of Payments Services Directive 2 (PSD2). Would we be better off ‘out’ as a national banking industry, forging ahead with our own national plans without the tedious constraints of EU regulations? Or would staying ‘in’ help the UK economy and make payment services better for UK consumers and businesses?


Before deciding whether we are in or out on PSD2, we ought to understand what it’s all about.


The PSD2 Access to Account (XS2A) provisions seem relatively simple to explain, until you get asked about standards, technical specifications and how will enforcement work. An analysis of the Hokey Cokey is probably not the place to go into these details so I'll leave that to better bloggers. The UK’s Open Banking initiative is even simpler in its concept - all banks should open up their systems via easy-to-use Application Program Interfaces (APIs), for the benefit of an international developer community that is eager to create exciting new financial services tools to make our lives easier. For both PSD2-XS2A and UK Open Banking, banks and infrastructure providers will have to think differently about how they maintain their existing systems. They will need to embrace ‘openness’. Magic will need to happen.


So let’s come back to the perplexing question of whether the UK should be in or out.


We could start by putting our left arm in.

No full commitment would be required, for PSD2 and Open Banking it should be possible to do a trial. Then we could participate on concepts, the developer experience, specifications, guides etc. and help to shape the emerging ecosystem across Europe.


Left arm out.

Well we don’t necessarily need to agree with everything – say the current guidelines on strong authentication for online payments. We can always work to refine that later when we put our left arm back in  again.


In, out, in, out and shake it all about.

Clearly an ancient metaphor for ‘disruption’. We need to agitate for change rather than waiting for change to happen – this is all about putting energy into co-operation and new ecosystems. It’s jolly hard work.


Repeat with right arm, left leg and right leg.

This process of creating an Open API banking ecosystem across Europe will be a gradual, phased approach. Expect many iterations and repetitions. Do not worry though – everyone else is feeling equally foolish about not knowing exactly what to do and in what phases.


You do the hokey-cokey, then you turn around – that’s what it’s all about.

Er? The hokey-cokey - what’s that again? Well it probably derives from “hokus pokus” – it’s magic. It’s the bit where cognitive dissonance has been overcome and you accept that everything is different. You have embraced the new way of thinking and constructed your new banking ecosystem based on Open APIs. Individual banks now provide magically unimpeded access to core payments and accounting systems.


And then you put your whole self in.

Yep – full commitment. Because if you are good at this Open API business, you will generate a load of new transaction volume from emerging service providers. And you’ll be helping your digital teams to create revenue-generating new propositions. So don’t worry about the details, just get on with it.


So hopefully that’s all clear then. UK banking and Fintech industries need to be in, out and shaking it all about. We need to be in the EU so that our industry is building services that will be used and consumed by new businesses in the biggest possible market (i.e. EU-wide and not just UK specific). We need to be out – in the sense that we are out, ahead; building an ecosystem in the UK that leads and shapes similar initiatives across Europe and beyond. And we need to ‘shake it all about’ – a lot of time and energy will need to be spent in the next few years if UK Financial Services and IT industries are to maintain a leadership position.

And that - meine Damen und Herren - das ist die ganze Sache. 


TagsRisk & regulationInnovation

Comments: (6)

A Finextra member
A Finextra member | 29 February, 2016, 09:19

A memorable analogy.

The UK Open Banking initiative could be seen as first steps towards XS2A - for both timing and technology.

If UK sticks to end of 2016 for implementation of the basics (no personal data - and largely making available things that are already on bank web sites) then it allows banks to become more familiar with working with a broader set of developers and to put in place the foundations for the next set of APIs that could address both sets of requirements. 

1 thumb up! 1 thumb up! (Log in to thumb up)
Neil Clarke
Neil Clarke - Volante Technologies - London | 29 February, 2016, 10:15

Entertaining stuff Lu!

1 thumb up! 1 thumb up! (Log in to thumb up)
Lu Zurawski
Lu Zurawski - ACI Worldwide - London | 29 February, 2016, 10:15

Yep - well said Paul. "Becoming more familiar" with APIs and the developer community is essential. And to paraphrase an Akana comment from last year, the API ought to be viewed as the new website. 

1 thumb up! 1 thumb up! (Log in to thumb up)
Bob Lyddon
Bob Lyddon - Lyddon Consulting Services - Thames Ditton | 02 March, 2016, 11:34

Excellent, Lu. Do we know what the risk is that the EBA will issue standards that conflict with the Open Date Institute API and then, being European law, trump it (assuming that the UK is still in the EU)? And we are just talking about account statement information, aren't we, so that the EBA may choose to state ISO20022 camt in the same way that the SEPA Migration End Date Regulation specified ISO20022 pain for file-based customer2bank and ISO20022 pacs for all bank2CSM2anotherCSM2bank??

1 thumb up! 1 thumb up! (Log in to thumb up)
Lu Zurawski
Lu Zurawski - ACI Worldwide - London | 02 March, 2016, 13:03

Bob, we seem to have entered a curious regulatory era, characterised by principles and abstract standards. So I sympahise with your Standards-Angst!

EBA's regulatory standards could specify data formats (and other regulatory tests) for Access to the Account (XS2A) that differ, and possibly trump, the UK's OBWG's initiative. But the impact will be minimised if banks have adopted a flexible API-based approach, not just for Open Banking, but for all collaborative ventures. This API-led thinking allows a radically more agile approach to the traditional response where you wait for explicit specifications before committing to an enterprise messaging development program. Too idealistic?

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Bob Lyddon
Bob Lyddon - Lyddon Consulting Services - Thames Ditton | 02 March, 2016, 16:09

No not so, Lu, if it meets the requirements, but I can imagine a lot of tech-vertigo and reaching for the touchstone of the MT940 specs for fields 61 and 86. "Richer data" - that's 8*35 isn't it? Yes, banks need an Enterprise Integration Application.. where's Sungard MINT when you need it?

1 thumb up! 1 thumb up! (Log in to thumb up)
Comment on this story (membership required)

Latest posts from Lu

Do ATMs dream of electric money?

26 June 2017  |  6758 views  |  0 comments | recomends Recommends 0 TagsCardsInnovation

The Coin Nudger - will cash ever fall off the edge?

28 March 2017  |  4780 views  |  1 comments | recomends Recommends 0 TagsPaymentsRetail banking

Was the EBU responsible for the war on cash in Sweden?

13 May 2016  |  2891 views  |  0 comments | recomends Recommends 0 TagsPaymentsInnovation

Will Open APIs lead to Chip and Paw?

01 April 2016  |  3564 views  |  1 comments | recomends Recommends 1 TagsRetail bankingInnovation

PSD2 and the Hokey-Cokey Conundrum.

26 February 2016  |  5031 views  |  4 comments | recomends Recommends 0 TagsRisk & regulationInnovation

Lu's profile

job title Practice Lead, Consumer Payments, EMEA
location London
member since 2014
Summary profile See full profile »
ACI. Bipolar payments expert: Curious/optimist & Realist/skeptic. Still playing with Mondex wallet.

Lu's expertise

Member since 2014
13 posts38 comments
What Lu reads

Who's commenting on Lu's posts

Neil Clarke