More than two thirds of bankers fear that PSD2 will cause them to lose control of the client interface and many of them remain unsure how to respond to the new directive, causing them to adopt a defensive, wait-and-see stance, according to research from PwC.
The revised Payment Services Directive is designed to create a more level playing field for third party payment processors (TPPs) by making banks in Europe offer application programming interfaces (APIs) that provide access to account information to third parties.
PwC says that the move will be a catalyst for disruption and strategic renewal, setting the stage for open banking in Europe but, inevitably, it is causing nervousness among bankers.
The firm quizzed senior execs at 30 major banks in eight European countries, finding that 88% think that PSD2 will affect their business, with 68% saying that they will be weakened as a result of the directive. About two thirds say that they are concerned about losing control of their customer interface and more than half think that there will be a risk of liability problems.
However, despite the perceived risks, 44% of those quizzed plan to provide an open bank offering in the next five years. 64% intend to integrate foreign products or functionalities in their own digital offering, 44% to embed their own products into other ecosystems, and a third to offer new functionalities that are essential for existing ecosystems.
Banks' concerns about PSD2 is given weight by a survey of 1000 German consumers by PwC, which shows that 88% already use third-party digital payment services, such as PayPal and nearly three-quarters of them know that these services are not affiliated with their banks.
In addition, 85% rate the security of these alternative payment services as “high” or “very high,” and 82% “agree” or “strongly agree” that companies such as PayPal and Amazon can handle cash transfers as reliably and safely as their banks.
With these third parties clearly having established trust, PwC predicts that they can use PSD2 to expand beyond payments into other services, such as account monitoring and personal financial management, that banks have traditionally offered.
With PSD2's mandates set to take effect in 2018, PwC concludes: "The only truly relevant question for European banks at this juncture is whether they will choose to lead and shape the future of open banking or be reduced to regulation-bound providers of commodity services to other, more visionary companies."
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