Introduced in 2018, the second Payment Services Directive (PSD2) paved the way for of open banking in financial services, whilst implementing a 90 day rule of authentication for users.

The rule required customers to confirm access to their data for each open banking service and bank they use every 90 days. The need to for strong authentication required users to provide two security credentials each time.

As of November 2021, the FCA amended the rule in that now users can confirm service providers’ access to their data using Strong Customer Authentication (SCA). This amendment will come into effect today. Now users can simply pick “yes” or “no” every 90 days.

This change to the regulation will impact all open banking service providers and customers.

The FCA stated that it expected third party providers (TPPs) to be technically ready to reconfirm customer consent as soon as possible after 26 March 2022, however, the regulator extended the industry a transitory period up to 30 September 2022 where it would not object if TPPs did not reconfirm customer consent, provided that SCA was applied at least every 90 days during that time. 

Iain McDougall, chief commercial officer at open banking platform Yapily, praised the regulation: “Crucially, this is done without compromising on security, with end users benefiting from less friction whilst retaining control over how they share their data. It is also important to highlight that all users of open banking-powered services, both consumers and businesses alike, have the flexibility and control to remove their consent at any time.

“This is a vital step forwards for the industry and will help to spur open banking adoption in the long run. Now, it’s on banks, regulators, and open banking providers to help businesses prepare effectively. It’s essential that these changes are clearly communicated to the end user to prevent drop-off, boost conversions, and build trust.”

Yapily is one of the leading fintechs pushing for open finance in the UK and EU with the Open Finance Association, along with Plaid and Truelayer.