Banks across Europe are in a race to prepare for the introduction of new payments regulations as the sector opens itself up to outside innovation and competition. This will take a shift in perspective from many banking institutions, but is a necessary step forward, according to an article on Finextra.
The revised Payment Services Directive (PSD2) being ushered in includes the use of APIs to provide mandatory access to bank accounts. This is intended to drive innovation in mobile and internet payments and open the industry up further to non-bank competitors. This will be a major change in the European banking industry, with only 14% of over 100 banks polled by Finextra claiming they will be ready to offer the service from Day 1, although when that will be remains unclear.
The overall trend of the poll showed an aggregate positive result of 78% of banks being in the process of rethinking their banking/customer relationship and business model. One of the delays in uptake could be the issue of security, with 88% of respondents indicating this as their main concern. Despite this worry however, legacy infrastructures may play a more immediate role, with only 5% showing confidence that their core banking system will not impede their move to become an “open API bank.”
Director of Innovation at Consult Hyperion David Birch encourages banks to see their API framework, strategy, and the APIs themselves, as business issues. “It may be hard for traditional banks providers to come to terms with the idea of opening up in this way but it seems to me to be an inevitable restructuring in organizations that are going to survive in the new environment.”