PSD2 – Everything that is important to you

We show you a way out of the interface chaos

PSD2 is the updated EU Payment Services Directive (PSD2). With PSD2, two new types of service providers are gaining access to the payments market: account information service providers (AISP) and payment initiation service providers (PISP).

First of all, the additional regulatory burden on banks is lower than on FinTechs. You already have an authorization with the Federal Financial Supervisory Authority (BaFin) and therefore you do not have to deal with this sub-aspect anymore. Rather, banks are facing the challenge of implementing the development and provision of an interface for third-party providers by 2019. The specifications for the more precise design of the interface are defined by the so-called Regulatory Technical Standards (RTS), which are developed by the European Banking Authority. Currently, the RTS are still in the design phase. The concrete specifications of what data is transmitted via the interface from the bank to FinTechs, such as fino, to be shared, so are currently in the discussion. The final version is expected in November of this year at the earliest. Only 18 months after ratification of the final version, the banks will have to provide an RTS-compliant interface. The “big bang” from the perspective of the banks, it is therefore not – as often read – in January 2018, but rather in the spring of 2019.

What does PSD2 mean for banks?

In addition, the bank’s challenge is strategic. Even today, the expectations of customers in online payment have changed considerably. More and more customers are demanding “smart” solutions and strive for maximum user experience. PSD2 will drive this trend. That’s why banks are already having to deal with various issues:

  • How do you react to growing customer demands?
  • How can you add value to your customers to further strengthen their position in the -marketplace
  • What wishes will customers have in the future in the course of digitization?
  • Do you have the know-how and the ability to mobilize these resources to guarantee a comprehensive user experience in addition to the functionality?

In order to meet customer requirements in the future as well, it is therefore necessary to offer innovative solutions in order to offer the customer a better user experience and at the same time sensible added value. This is no easy task and requires resources and know-how. In the past, FinTech companies have entered this breach to support banks and other payment institutions. Banks must therefore be clear about how they want to act in the future in the market:

  • Do you use your existing resources and expand your core business or target groups?
  • Are you continuing to work with FinTechs to develop innovative services, or are they investing additional resources to develop them yourself (in direct competition with established fintechs)?
  • Do you prepare a basis with your own services, which you can then link with additional FinTech solutions?

After all, every bank has to decide for itself which way to go. Overall, however, PSD2 also offers a number of opportunities from a banking perspective:

  • With the provided interface services can arise that were previously not thought of.
  • Cooperations with BaFin-regulated FinTechs are easier to justify or answer to customers directly. after data protection – so a possible loss of trust can be prevented.
  • FinTechs continues to develop new services, while focusing more on (pot.) Own customers and new markets. This will allow banks to offer their customers even better services and services in the future, resulting in higher customer satisfaction and thus greater customer loyalty.

But what does the PSD2 implementation actually mean for fintechs like fino?

First of all, the obvious: FinTechs already regularly play the role of an account information or payment service provider (KIDL or ZADL). As Third Party Providers (TPPs), they are included in the PSD2 Regulatory Group when the ZAG enters into force. If they want to continue to operate in the usual way in the future, they must make an early effort to obtain a BaFin registration or admission. You have until April 2018 at the latest to submit the registration or admission application to BaFin. 

Although the regulations are not as comprehensive as with other payment service providers, since TPPs never come into the possession of customer funds, nevertheless, a comprehensive examination of organizational, legal and also technical measures is necessary. The effort thus relates in the first phase to purely organizational processes. Many requirements that underlie a BaFin registration or approval are implemented by fino right from the start. For example, the account change service has since the beginning of the data protection certification of the TÜV Saarland. 

Sobald die zweite Phase, also die verbindliche Bereitstellung von RTS-konformen Schnittstellen Anfang 2019 startet, werden FinTechs sich auf eines der denkbaren Szenarien einstellen müssen:

One for all – all for one?

Although the final interface requirements have not been adopted, it is clear that the legislator will not give any specifications for a uniform interface since the specifications must be technology-neutral. So theoretically it would be possible for every bank to cook its own interface soup and we will go down in 2019 in a sheer flood of it. However, this would be of little use to customers, banks or fintechs. On the one hand, the cost-benefit outlay would not be efficient; on the other hand, individual implementations would take more time than a standard solution. FinTechs and fino’s strengths now have to meet technical requirements quickly and reliably – the use of different interfaces would therefore be justifiable, but would have to be checked against the associated overhead on all sides.

More likely is a scenario similar to that currently implemented with HBCI or FinTS: a standardized interface used by the majority of banks. Thus FinTechs would have to adjust only to a handful of different interfaces, which must be used. To what extent the number will change in the coming years remains to be seen.

Although the above approach is likely, a third scenario would be desirable: agreeing on a common standard for all interfaces. For example, banks could more effectively use and save the resources they would need to spend to develop custom interfaces when working towards a common interface.

Summary from our own perspective

Even if fino is faced with a host of different interfaces, the scenario of a uniform interface solution is clearly preferred. A standardized interface, which can be used at the entire federal or even EU level, would provide advantages for all involved, especially for end users: the resulting time savings could flow directly into the development of convenient services, and thus to the end customer to provide more innovative services that you expect in a digital age. In this way, the best solutions for end customers can be developed in cooperation with banks in the future as well.