Interesting recent Article published by Evry.com outlining how PSD2 will effectively open up the payments plumbing operated by the traditional banks to third party service providers such as Facebook and Google.
PSD2 must be operational law in Ireland by 13 Jan 2018.
PSD2 has been introduced in an effort to shake up the way in which money is moved around the world. It is a response to the impact which rapid tech development has had and to make payments cheaper, safer and more secure.
In essence our regulatory overlords want to encourage innovation and competition in payments and that drive is sending shock waves through the financial industry.
One of the primary drivers of PSD2 is to allow tech companies who are at the cutting edge for delivering consumer services to the millennial generation access the plumbing network of the traditional banks- to gather and move data and to move money.
Your iPhone will be your bank of choice post PSD2.
Its not just the Banks themselves which are a-twitch over PSD2- Frankly the payments monoliths such as Visa and MasterCard are also squarely in the cross hairs here.
All of the above is a massive injection into the Fintech sector- with clever little humans designing new Payment API's and figuring out just how to bring easier instant banking services to us all.
The Irish Central Bank (CBI) is the Irish regulatory authority with responsibility for ensuring that PSD2 " works" in and from Ireland.
The CBI recently published it's new forms and guidelines on the information to be provided by those tech and related companies who want to get involved in opening up that pluming. The reality however is that uncertainty surrounds how official Ireland will actually cope with and regulate for PSD2.
What is certain however is that a lot of the traditional banks and financial institutions are bracing themselves for considerable flood damage over the coming years once PSD2 comes into force.
2018 is set to be a game-changing year for retail banking. As the PSD2 (Revised Payment Service Directive) becomes implemented, banks’ monopoly on their customer’s account information and payment services is about to disappear. The new EU directive opens the door to any company interested in eating a bank’s lunch. In short, PSD2 enables bank customers, both consumers and businesses, to use third-party providers to manage their finances. In the near future, you may be using Facebook or Google to pay your bills, making P2P transfers and analyse your spending, while still having your money safely placed in your current bank account. Banks, however, are obligated to provide these third-party providers access to their customers’ accounts through open APIs (application program interface). This will enable third-parties to build financial services on top of banks’ data and infrastructure.