PSD2 (Payment Services Directive) is a very hot topic from the very beginning of the work on the project. From January 2018 is the law in force. Are banks prepared for changes?
Characteristics of the market conditions force them to have already implemented some integration mechanisms reaching into internal banking systems (e.g. mobile applications). Banks already have integration solutions, so the foundation necessary for the implementation of PSD2 is laid. On the other hand, PSD2 directive formulates requirements, but these standards do not go to the technological level, so there are no unambiguous solutions that could be applied. Being ready for something that is undefined is the hard task. PSD2 Directive requires from banks to provide API, a set of functions available to other developers from internal banking systems. Banks are facing a huge challenge.
So what challenges are facing banks now?
First of all – technology. The conditions in which banks operated before PSD2 consisted of one / two financial services providers to cooperation. At this moment, we are opening up to others, and we do not know how many of these cooperation parties will be in future. One of the critical factors will be ensuring stability. Regardless of the number of cooperation parties, the API will have to work without any problems.
Another aspect will be quality of data – banks will take advantages of new business opportunities provided by PSD2, and offer new services to the client, whose quality may depend on how other banks will provide the required data. We can imagine that other financial market participants adopt a stiffened stance, implementing the requirements of the directive in a minimum level and this could have a significant impact on the quality of services offered by the bank. The development of specific standards is coming to help – in Poland we have the Polish API, but we must remember that this is not a universal solution. For this moment several of these standards in Europe are during preparation.
On the other hand is the business. The appropriate strategy of implementing PSD2 creates many opportunities to build a competitive advantage for the banks e.g.: introduction of new services to the portfolio (e.g.: aggregate accounts view), a better understanding of the client allowing for personalised offers, the possibility of opening new channels and reaching a range of new clients. The key to unleashes the full potential of PSD2 is the appropriate implementation of Open API.
Taking into account all these factors, what aspects should be considered with attention during PSD2 implementation?
The ability of an integration platform to provide stable and secure access to the internal API for financial market participants is essential.
The second important issue is the complementarity of this solution. Solutions (API Gateway type) assume that some interfaces do exist and process data. Maintaining technological continuity can help to minimise the number of errors and effectively use resources. On the other hand, if you are not sure if your solution is working well enough to process this amount of data, it is worth considering change – security and stability are key factors.
The third issue is cooperation with the right Partner who – apart from the technology – will be aware of fundamental business goals. Banks can stiffen, meet the minimum requirement, but we can also adopt a proactive attitude to be a flexible entity that is open to all kinds of interactions and the opportunities. And the role of the provider is to help in efficient implementation of open banking with the minimum of bank’s resources.
Integration architecture should be flexible enough to allow the components to be re-usable. When new needs appear adaptation to other requirements will take place with the involvement of a minimum of resources. Of course, there are also issues such as understanding the financial industry business and experience in integration processes also crucial for effective integration.
Savangard, like many other providers, offers a solution ensuring compliance with PSD2. What distinguishes this offer from other products available on the market?
Providers offer ready-made solutions – Savangard PSD2 Solution offers ready-made solution ensures compliance with the directive in way adjusted to the bank specifics. We have the competence and experience that allows us to meet the needs of the client and fit the solution to the bank’s situation, minimise the risk and maximise the benefits. We have grounded knowledge and both internal and external integration. The implementation of projects for the banking sector allowed us to get to know the technological stack of banks, the nuances of cooperation and the specificity of the industry. Requirements of PSD2 are not entirely new thing. Some of the banks that wanted to stay ahead of the competition launched solutions, reflecting what the PSD2 Directive introduces. Savangard has been partner in these implementations
Paweł Janczura, Sales Director, Savangard