Back in June, the European Banking Authority (EBA) published its response to the European Commission’s call for advice on its review of the revised Payment Services Directive (PSD2). That review is set to lead to a re-revised payments services directive in the coming years that the industry is referring to as PSD3.
As the official mouthpiece of the European banking sector, the EBA’s report raised concerns that will most affect banks and included close to 500 recommendations for the European Commission to consider. The document also articulated some perceived shortcomings of the current directive with which the industry is grappling.
Specifically, many of the suggestions address ambiguity in the existing legislation and the need for some degree of standardization for open banking APIs for financial institutions (FIs).
But PSD2 has had far-reaching implications outside of the limited sphere of banking, not least in the realm of financial technology.
Non-bank entities have integrated open banking APIs into their systems and PSD2’s requirements for strong customer authentication (SCA) affect pretty much every eCommerce merchant, FinTech and payment processor that does business in Europe.
One of the concerns industry players have pointed out is how mandatory SCA as defined by the regulatory technical standards of PSD2, leads to friction in the customer journey.
“Open banking in the U.K. has been disappointing. If you look at Holland, for example, the permission customers have to give to access their data is way easier, whereas the early implementations of open banking in the U.K. have felt like a phishing attack,” Andy Mielczarek, co-founder and CEO of U.K.-based digital bank Chetwood, told PYMNTS in an interview.
Watch the interview: Chetwood CEO Calls Open Banking ‘Disappointing,’ Regulation Key to Neobank Success And while the customer proposition to offer personalized and relevant product and service as well as a much simpler and faster experience […]
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