A FINEXTRA WHITE PAPER PRODUCED IN ASSOCIATION WITH AXWAY SEPTEMBER 2016

PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM CONTENTS

01 Foreword: It’s all about the ecosystem ...... 3

02 Executive summary ...... 5

03 Introduction...... 6 04 The heart of the matter: A2A unpicked...... 9

05 Open APIs: help or hindrance for banks? ...... 21 06 Defining your role in the digital ecosystem...... 28

07 Conclusion: key takeaways...... 32

08 About ...... 34 3 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM

Banking & Financial Services Axway & Financial Solutions, Banking By Bruno Cambounet, Vice President Cambounet, By Bruno

01 FOREWORD IT’S ALLIT’S ABOUT ECOSYSTEM THE have to work hard enough to win and retain customers (see the August 2016 the win August to hard 2016 enough retain and (see work to customers have report). Remedies Indeed, in theIndeed, UK, banking open is the clear a response to damning and banksCMA UK that 2015 not findingsof report, do which the concluded about the progression of open banking. banks. incumbent for challenges true competitive creates that openness It’s implications of PSD2 and increasingly and viewing PSD2 of to as openness implications a prerequisite forward. financial and payments The services going drive innovation businesses important retain to a global perspective thinking it’s and when are international, Even outside Europe, in the Europe, Americas outside Asia, and bankingEven open thinking is becoming pervasive, with banks in and these the impact markets at looking initiative spearheaded by HM by Treasuryinitiative further and spearheaded faster – are already going thanrequires. PSD2 some markets – notably the new mandates in mandates the UK the new the Competition issued by marketsnotably – some Group the Open Banking that followed Working Authority Market and (CMA) In Europe thisIn Europe the revised by is mandated being Services Payments Directive requires which banks regulated access to third provide accounts to to (PSD2), services. information account And parties and/or initiation providing payment customers to take advantage of innovative new services new innovative of take to willadvantage customers the norm, become not the exception. a no-brainer to assert that open banking is a hot topic for the (very near) future. near) the (very assert for to a no-brainer banking that open topic is a hot those enable to in accounts order Banks customers’ sharing about information Digital business in any industry is about developing an ecosystem extended Digital to in business any industry developing is about better Banking serve customers. financial and services it is and no are different PSD2 or open banking open or further. PSD2 Our aim with in working Finextra this on banks research how in explore is to banking open today, are approaching Asia) and US (the beyond and Europe they are how thinking opportunities and the challenges gauge to being about the sharing insights of enable to and openness, to the and move PSD2 by created best banking progress tackle their to in to these open how issues in order strategies. bothinteresting and follow out find inpages the findings that the set you I hope like discuss to would if any aspect you inuseful, of touch get to I invite and you personalised services. are On the other the banks’ partners banks – other and servicespayment in in banking an open that can a role providers world play services products, that customers interactions and the nextdelivering generation are expect. coming to banksIn this questions obvious ask themselves are there context, must some with far go they banking how to want open – including with (basic compliance their chosen of implications the technology and strategic what further?), or PSD2, to in order overcome to need they hurdles would be, what and would approach move ahead. provide the fullprovide servicesof range the rich cover variety to needed all of possible all for customers. life situations certainly while customers servicesTherefore, the want innovative and PSD2 also true that the it’s banks bankingopen those need enable, are to designed can demands their services customers’ set of innovative ensure the to complete be comprehensively catered for. is critical that it This believe with we is banks why for their engage ecosystem to if they are guarantee to their future success in digital – banking. open – and relevant, and omnichannel demanding are the customers side On the one requirements of banks’ in this of customers requirements digital Retail age. increasingly – and require from – customers their bankscorporate an omni-channel, tailored, contextual thedigital experience, matches which experiences when they have dealing with lives. in their providers personal professional and other if any financialFew services companies willprospect relegated relish of being the all the contrary, processing; will on providing commoditisedto end back be with they maintain But have to their customers. the relationships motivated this the requires right provide services to them the right time the at right to realistically – and customers banks the largest even incumbent will struggle to However, open banking open is also a necessaryHowever, the changing response to

4 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 5 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM

central role in the ecosystem going forward. in thecentral ecosystem role going play in a world where customers of all of kinds customers digital where orchestrated need experiences in a world withplay banking other and payments services are They thinking as an integral component. about secure to they the that opportunity can inhow order themselves, leverage be TPPs to one part of their broader digitalisation programmes, and as essential components of their digitalisation of part programmes, as and theirone essential broader of components the digital to ecosystem. are They thinkingoverall approaches they can the roles about standardisation, are there and be the calls taken European to at a similar for approach level as well. API (and avoid the possible problem of every of bank defining and their problem differently APIs the possible avoid API (and making Initiativesas such to to very connect all). them it fintechs challenging for very as drivers on positively are for looked Group Open Bankingthe UK’s Working Markets Authority (CMA) in UK, there are some concerns about how to reach a standard reach to in UK, how concerns AuthorityMarkets about are there (CMA) some their operations. Banks outside Europe (with or without operations directly without operations by or impacted (with Europe Bankstheir operations. outside the benchmarks in aim of an to the are as forthcoming for one at change looking PSD2) bankingopen context. growing. PSD2 is a key driver of the take-up of APIs but it is not the only one – there is – there one the only is not it isgrowing.driver a key the take-up APIs of of but PSD2 many and global banks openness to are thisa global move to responding throughout banks are thinking strategically about how to leverage PSD2 to offer better and more banksmore better offer and to are thinking PSD2 leverage to strategically how about services their customers. to comprehensive leverage new business opportunities business new from the change. leverage Corporate trade. and cash payments, also management – for corporates but environment in practice, but overall banksin with practice, but the comfortable landscape are will how more look, to in order compliance, progressed beyond in have and their thinking go to how about still areas where more information is needed about how PSD2 will be implemented will PSD2 how be implemented still about is needed information areas more where This year, banksThis progressed year, in have their thinking APIs as open and connected to about While the need for open APIs is not disputed, and even imposed by the Competition & the Competition imposed by even and disputed, APIs is open not While the for need The focus on open APIs as a means to enable the openness that PSD2 demands is demands that the PSD2 openness APIs as open focus a means enable on The to There has been an increase in focus on how PSD2 will has been anThere the just retail PSD2 increase not in how focus impact payments on During 2016, the banks’ approaches to PSD2 have become more strategic. There are strategic. There more become have PSD2 to the banks’ approaches During 2016,     

02 EXECUTIVE SUMMARY In the pages that follow, thesedetail, findingsmore in are explored with a offering thatto follow, In the pages view banking open and in PSD2 around banks how developments insights can into leverage secure define and to their futureorder in evolving roles the digital ecosystem. • • • • The key findingsof key research The the include: • payments. The purposeThe the Finextra of research this which is based on has establish paper been to the industry standswhere with now in a critical the run-up to PSD2 period in its as as well assess to with the progress made APIs being in open bankingimplementation, and 03 INTRODUCTION

The EU Revised Payment Services Directive (PSD2) comes into force in January 2018, so as we head towards the fourth quarter of 2016, it is reassuring to observe a clear shift in the thinking about, and approach towards, this signficant regulatory change on the part of many of Europe’s banks. 6 |

PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM During 2016 there have been events which have shed more light on the situation. One is the release of a much anticipated document, the European Banking Authority’s (EBA’s) consultation paper on the draft Regulatory Technical Standards (RTSs), specifying the requirements on strong customer authentication and common and secure communication under PSD2. Though questions remain about how the Directive will be implemented in practice, in general the EBA’s document does seem to have quietened many of the banks’ prior concerns (though it has also created discomfort among some of the new entrants).

There have also been events which have muddied the waters of course – such as the surprise UK Brexit vote in June. Given the leading role the UK Government and UK banks have been taking in the open banking movement, through the Open Banking Working Group, the prospect of the UK not transposing, implementing and complying with PSD2 was an unsettling one. In reality of course that leadership role continues, and the UK’s banks are pressing ahead with their PSD2 compliance plans. Brexit cannot happen before 2018, and in any event the prevailing view is that, if anything, UK regulation going forward will continue to ’gold plate’ that of Europe, rather than conforming to any lesser standard.

“APIs are useful in a typical client/server type environment where there is a need for frequent querying to be carried out. For bi-directional communication – where one bank would like to inform another directly that something has happened – messaging is better. You don’t want to have to query first. So there are advantages and disadvantages to both. An API could actually reach a wide selection of banks, but there could be a need for some complementary capabilities provided by messaging technology.” FRANK VERSMESSEN, HEAD OF REGULATORY AFFAIRS, SWIFT 7 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM Willems-Rosman: Corporates looking to information for banks PSD2 about in which they operate – so if openness is mandated in Europe (and elsewhere) it elsewhere) (and in is – so if Europe mandated openness in they which operate effectively bankingeverywhere. impacts open because partin But is happening it’s needs. otherwise, regulation or customer meet to anyway, in order with banking In part open them. APIs what mean open and for this is because they similar want to likely customers global frameworks in all inhave place the markets Singling out the strongest driver among so many powerful levers for change is not is not so many powerful change driver the strongest among Singling for out levers say arebanks to that it worldwide grappling Suffice necessary. easy probably nor deliver them and the market didn’t have the structure have the ecosystem didn’t the and market enable them or to deliver the alerting paper tagging and was did we What of put transactions example. of for data do.” allowed our us to what – because online that’s statements 15 years ago and we launched online banking. It was more or less the same as or it banking. online was more It 15 launched years we and ago to way no had we – but now as then have we back the same ideas had We is now. Colm Lyon, CEO and Founder of Ireland-based new payments entrant Fire entrant payments new Ireland-based of CEO Founder and Colm Lyon, Financial Services, to now are factors coming together agrees of that a number visions be I was earlier realised. in to a bank working when canenable “I remember aligned.” Banking Association (EBA) says: “Much of the thinking of banking open is “Much not about Banking says: Association (EBA) further to until available was recently the but technology not evolve in itselfnew, this thinking practice, so the mindset the industry into of it wasn’t just put and robust competition) and protect consumers, two other key trends are prompting two trends key consumers, are other protect and prompting competition) robust savvy evolving and – ever-more it, openness demanding greater customers Secretary Egner, as Indeed, the General Thomas Euro it. of enable to technology findings of the UK Competition and Markets Authority that incumbent providersMarkets Authority findingsof and the UK incumbent that Competition of a lack to serve due to their hard customers enough work to have not do simply on the competitive landscape the in competitive bankingon payments. and in clearly the In concert with (reflected drive to looking regulators competition legislation in place since 2010 to underpin the safe provision of payment services payment of the safe underpin provision to by 2010 since in place legislation also others currently among regulator has its sights Singapore’s and entrants, new course. In parallel, the buzz around open APIs (and the open banking they facilitate) banking the open theycourse. facilitate) In parallel, APIs the buzz (and open around not for reasonthisbut hasone – Regulation alsois throughyear. intensified the China Europe, has had from outside examples givea few just To regulation. EU just The relentless march of time towards PSD2 day one is not the only driver in play of driver the only in is play not one day march time towards of PSD2 relentless The increasingly corporate) and – crucially – stronger evidence of banks – crucially and evidence of identifying – stronger increasingly corporate) and opportunitiesdeveloping and PSD2, in (significant) but challenges just not capitalise them. strategies to on executing solid of the hardof lines still thatwere partsvisible in some the industry of inthe first between less talk talkbanks competition of more part entrants, new and 2016, of (retail but also customers withfor to drive collaboration fintechs of innovation In line with the reality solidifying, PSD2 of the banks’ is also it attitude to firming has beenblurring a There positive. more and strategic becoming and both more up,

other servicesother activities PSD2 Our part relevant are them. for are that efforts of our KIRSTINE NILSSON, HEAD STRATEGIC OF ENGAGEMENTS RELATIONSHIPS& CASH& MANAGEMENT, SWEDBANK PAYMENTS GROUP We want to be the digital service provider for our customers, covering not only banking service banking want to digital be the not only We customers, covering provider our for but digital to with customers, that provide and relevance in our relationship to create a digital tosee log Swedbankso – everythingon you and relationship vital is your that to run you for contextual the part of it.” That’s everyday economy. “ their digital Third-party use another easily to choosing channel quite by Payment are ensure we to the trusted have we remain to and relevant Provider (TPP), the digital of digital provider The can channel. partner, environment be a scary be as is to ensure as is that it relevance to safe our and a place consumers, for place possible.” that experience in a contextual way. In light of this, of In light strategies that experience investments and in a contextual way. banking open APIs all open and PSD2, part become for wider digitalisation of strategies investments. and Swedbank, for always journey we and co-ordinate“Digital has been an ongoing Kirstine says resource and allocate this,” we to the time, money level a group on & Payments Group & Relationships, Engagements Strategic of Nilsson, its Head we but existing relationship, a valuable customer have “We Cash Management. been have Historically attracting keep and it customers. people protect new to need can They they will change to. banks, have in world the new move not but to hesitant number of banks raising the PSD2 discussion to a more strategic level. They are They bankslevel. strategic of a more discussion raising to number the PSD2 is their own it they their clients sell to when saying the moment that while at throughproducts is that their own they think channels, happen what to is going they will distribute through their channels products – that will other become normal they – and with also might their products bundle services other completely through their own really channels. They see an moving the market to open architecture.” the banks for is step a short from recognisingIt this assessing to change, their role in the evolving digital ecosystem, re-orientating to and their digitalisation strategies experience orchestrating a focusfrom the on omni-channel a focus to on customer As Frank Versmessen, Head of Regulatory of Affairs Head Asdo seeat Swift, Frank a Versmessen, “We says:

8 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 9 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM

”

TOM BLOMFIELD, CEO AND FOUNDER, MONZO FOUNDER, AND CEO BLOMFIELD, TOM We are as much a technology company as we are a bank. Being able to provide able data via a bank. Being we are as a technology company much as are We not clear – if it does to come pass, we will opportunity react. the up opens PSD2 to be a marketplace bank. APIs in different in APIs formats pretty is straightforward is UK the in of The future PSD2 us. for

“ 04

A2AUNPICKED THE HEART OF THE MATTER: MATTER: HEART THE THE OF are giving customers. new to them have already acquired the customer, and because the customer can’t be bothered can’t because and the customer alreadyacquired have the customer, switch,to the banks can necessarily cross-sell that aren’t products competitively priced. banks The always giving are not the best deals they existing to customers; Banks give out footballs to persuade young people to open accounts with accounts open to and them, people young Banks persuade footballs to give out life they they Since cross-sell products. additional the customer’s throughout then bleak picture. “Forcing the will banks up the retail open picture. to bleak “Forcing upend banking system potentiallybanks big it’s the “For he says. of consumers,” in the UK the benefit to inertia because their is business lock-in. customer and based on problem a major scraps of low-grade commoditised back end account servicing account commoditised end back business. low-grade of scraps paintsof UK bankMonzo, digitala challenger Founder CEO and Blomfield, Tom disintermediation of incumbent banks incumbent the upstart hands of at of disintermediation all entrants, new set for scrabbling the traditional players leave and engagement customer dominate to services regulated so-called newly by provided TPPs. will which A2A the to lead has is been the hailed reason PSD2 as the development holding institutions (typicallyholding existing allow access to their customers’ to banks) information account and initiation payment facilitate to information account In repealing what is now being called PSD1, PSD2 introduces change on a number a number on change introduces PSD2 called being In repealing is now PSD1, what thefeature is that has the so called but attracted far by levels, attention the most of This requires which is the provision account element. (A2A) accounts” to “access has be balanced to with control.” and governance banks, for only granular be a problem of sharingThis information not level may Services Partnerships, Strategic Payment of warns Head Division, Box, John with be comfortable to Bank. that level Raphaels are “Whether going the customers “It says. he flexibility of how manage they financesin their remains to be seen,” can be a full-time managing job the security page. settings Facebook your around be successful, APIManaging be bank open like could your that as account To well. difficult something to accessmaintain willand education, and hand-holding need monitor over the long-term.” service transfer value and accounts services.” of providers A2A has also A2A of concerns. “The caused other challenge is access around to Portfolio, Payments of Head Leigh says Mahoney, data, from a privacy perspective,” giving consumer ANZ. a third Payments, partyGroup a “A at look permission to – that will banks. transactions to example challenges not balance for present but a granular – this to information level party out segregate can see that balanceTo effectively control and governance put don’t this – is challenging. If you not one but likeice-cream givingof a yearold tub a five it’s spoon a and door and front your on they know will all. spoonful. it eat Accessibility cansaying one You you have only to be involved in the transaction process? Yes. It’s hard for financial hard for institutions It’s in the transaction Yes. be process? involved to in the marketplace, change change, Technology the reality. that’s and change, to all a scramble. are the become indications that this to competition: intense is going from the same institution products taking will idea of The idea The multiple go. to app downloading another of the idea But switching account go. willof probably access all financial your – that caninformation reallywork.” caused banks have information access account up to opening of implications The As Enterprise Architect, Robert level. Langley, a competitive Payments concern at Australia National Bank,at is that “The banks observes: challenge the face threat disenfranchised being of third by parties be trivialised hence and as commodity to stand on its own stand on to two This feet. will price and increased to competition lead the banks will They this For between be caught is a rock problematic. compression. trying a hardand place, billion banking handle open to while also GPB2-3 spending regulatory and cost programmes.” on reduction each change A2A is certainly Fire driving at Financial factor Services. Lyon believes one change, is “It says. he be in to the future,” they the way are“The things way going are isn’t at it looking been we’ve way butthe predict difficult to itout, how exactly play will talk thatis are the be to attributes the successful. products to likely of about Are Are participants more going social, be Yes. secure, more to thingsconnected? going “PSD2 has the potential to up-end the has retailto the potential “PSD2 banking product each forcing market,

looking to partner PSD2 on withbanks Box: Fintechs are are Fintechs Box:

10 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 11 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM a really good authorisation process – where we have end-to-end authorisation through authorisation end-to-end have we process – where a really authorisation good third parties will a while it if and that is – is unclear for a challenge, give the industry little actually time to this way.” in put a proper in place unanswered, and for payments industry professionals, the document uses some odd uses some industry the document unanswered, payments professionals, for and illogical some displays terminology and thinking.This because concerns creating me, Not all bankNot observers are of fully Head reassured Gunnar Says the RTSs. by Berger, still concern we “The biggest is around have Nordea: at Solutions Cash Management questions still some have guidelines we The leave authorisation. and authentication the clouds. As is a text it also and the a bank, that grants clouds. grants consider innovation we us withthe ability liabilities.” be compliant our to that any player – whoever they are – would like to implement and promote. The promote. and they implement like are to – whoever – would that any player guidance far is technical, too also detail too in of view in not – not the right my level at market and has achieved the has and rightmarket balance achieved between the expectations different of “At the he says. a challenge,” quite users, is the different and and needsthat of players to secure enough innovation any is the flexible EBA has what produced the day, of end Though some refinements are needed, the RTSs are a “positive outcome”, agrees outcome”, RTSs needed, are “positive are a the refinements some Though “The Cards the BPCE. EBA of has to listened & Payments, Head Denèle, Fabrice per day maximum. This should help to limit to the types maximum.day per help This costs behaviours should that create of really benefit. for no strain service banks’ a denial of on to likened systems being core – sometimes attack,” that if states a third-party it the RTS “In says. she specifically responding is not to a the third-party information, for demand canclient query only the data twice bank for says, is the risk of constant querying by new payment players of the mainframes of is thesays, risk constant players querying of of payment new by “These banks information. typesestablished account for behaviours can a real of put procedures remain fully the bank. of in the sphere that hasAnother resulted challenge from third-party activity in the past, Wandhöfer that although payment initiation providers (PISPs) can rely on the authentication can the authentication on rely (PISPs) providers initiation that although payment these authentication secure customer theprocedures bank by its customer, provided to provider or an account information service provider and not by the client itself.” service the client by information an account or not and provider provider Furthermore, makes clear the EBA in document line with Article PSD2 (5), 97 fraudulent activities, it is appropriate to ensure that the account servicing ensure that the to account activities, payment is appropriate it fraudulent service initiation service payment a by is contacted is being aware that he provider highlights how challenging it would be for account holding banks queries receive holding to account be for highlights challenging would it how this is issue clarifiedfrom third parties credentials. However, using their customers’ limit the risks other and phishing to “To relating state: which says, in she the RTSs, holding banks have long been highlighted by banks. However, the consultation on the consultation been highlighted banks. by banks long However, holding have alleviatedthe of draft the EBA in by have August to some seem do published RTSs Citi, Regulatory of Strategy, & Market Head Global those concerns. Ruth Wandhöfer An improving picture for the banks? the for picture An improving account for perspective PSD2 fromdangers a data of protection potential The That said, even though not all though not aspects to said, even That the banks put little are clear, option have servicekey a communityaspect is definitely provider requiredsucceed.” to and hope to succeed to in having hope and HTTPS mechanisms named as options viable as that the situation is API worth therefore type It remembering alongside solutions. inoutlined the draft change. could RTSs IT of at Simões, Head time. Miguel Says valuable lose ahead if they to push are not is business market time a key that reduced to believe “We Europa: BNI Portugal’s In this sense, regulatorythough the technicaltoday. standardsdifferentiator are important the most thing as soon react requirements is to quickly change unclear, to IT an surrounded by engaged Being as the standards are disclosed in early 2017. screen scraping which, suggest observers such as Erik Engellau-Nilsson, Head of Head as suggest observers which, Erik such screen scraping Engellau-Nilsson, Klarna, at Communication basically means putting banks the established in control “This the banks’ the of mercy at entrants has IT. been theand done new supposedly security been no although security, have there the grounds of on issues with our basically a the use of “and means replacing Engellau-Nilsson, says all,” at solutions is and almost is which totally unproven with a solution the use of solution proven certainfrom the outset.” fully to work not reliably and are entrants new making disenchanted The plain through their objections their September) hearing for scheduled a public (including responses the consultation to service provider’s website. This communication interface should allow account should interface This communication website. service provider’s servicesinformation services initiation payment and on providers rely to providers servicing the procedures account by provided service payment the authentication service the payment to provider user.” communications internet “The also EBA discarded generic states: to It reference HTTPS, as them as … as HTTP, the EBA judged TLS,standards SSL) and (such standards unspecific use too and communication the for already under general of PSD2.” EBA conferredby on mandate as textsThese APIs the implying been use interpreted to of as opposed have shared by some of the new entrants. Among these players there are some objecting are there some these Among entrants. players the new of shared some by in the the draft provision strongly to services owning that account RTSs payment the via manage and interface create TPPs which should (typicallyproviders banks) data. account access servicing account service “Each payment states: should provider document The secureenabling withcommunication interface leastcommunication one at offer services information services initiation account payment providers, providers, services payment and issuing providers card-based instruments, payment which servicing the account on freely and available payment be documented should Any enthusiasm among the banks the among draftAny for enthusiasm as RTSs they stand is certainly not with APIs is creating with creating is APIs a standardised in them way Oddy: The challenge

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” THOMAS SECRETARY GENERAL, EGNER, BANKING EURO ASSOCIATION systems into state-of-the-art architectures from one month to next. the month architectures from one systems they Therefore, state-of-the-art into serviceneed to build layers successful world the to APIs. enable of in open operation For large or multinational banks, it is a fact it is cannot transform they that banks, legacy core large multinational or For “ having that right means the banks they put where can about make the decision will PSD2 and are very TPPs clarify active already, protection. consumer their all that not of believe We none. they have today responsibilities and where roles the account holding service provider the role of deciding the level of security of service the deciding level of and holding thethe role account provider credentials willwhat be used. banks The will but use them, to allow TPPs to have consumer protection.” This certain gives providers established strengths, “The give says. EBA RTSs she think, let’s block them out, keep them from entering the value chain, when you think you chain, thevalue when from them entering keep out, them think, block let’s expected realise increase us the is Commission to by of you it, that what’s about The banks’The thinking has “TPPs are certainly a threat continues. we and she evolved, might you while PSD2 initially read you will when deal to with have However, them. information on accounts. When it comes to the opportunity, here we see ourselves as see ourselves we here the opportunity, to comes it When accounts. on information are we and also the services customers, considering our for providers established we will They entrants. can new to from us.” provide information need and also how can we take advantage of this can alsoand of take how we as advantage an opportunity? On the first,we – standard have APIs to need we the and share capability to what are at looking Nilsson at SwedbankNilsson at echoes the view that the banks are the considering opportunities as A2A. as well actually of the the TPPs challenges have at looked “We compliant, become to do to need we “What do says. she from twoquestion angles,” that many banks thinking are now about.” in this space. Another interesting area is helping customers to apply for mortgages, mortgages, for apply to in customers this Another area interesting space. is helping significantly could be exchanged data to cut the time relevant of automation where Any data driven service applications. is something potential required complete to on financial literacy and education you you can Services see Information financialAccount on that education and literacy verybecome important. servicesBanks more clients will support to develop to look says. “We have been so concerned about issues like data protection, but the banks but issues like data protection, about been so concerned have “We says. are waking the fact that if to third up parties can this, do can so then the banks. If Strategy focus the Forum UK in of the Payment context this example at for look you some data and technology concerns,the banks’ data technology and been freed mindssome have think to more suggests. A2A, by presented challenges the other of Wandhöfer some about positively she service information banks is for interesting provision themselves,” “Account The power of positive thinking power The In any case, these uncertainties notwithstanding, with having the RTSs addressed

” RUTH WANDHÖFER, GLOBAL HEAD OF REGULATORY MARKET& STRATEGY, CITI financial literacy and education you can see that Account Information Services can literacy you see Account Information that education and become financial very important. services more will look to develop Banks space. to support this clients in mortgages, for where customers automation to apply Another helping area interesting is to complete required time the cut could significantly of relevant data to be exchanged Any now are data serviceapplications. banks driven many that something is potential thinking about. If you look at this for example in the context the in Payment Strategy of UK the on focus example for look this at you Forum If “ Banks must decide what their business response is to PSD2, he suggests. “Do he their PSD2, response business is to Banks what decide must with they compliance do basic the regulation, or achieve simply to they intend commercial opportunities answer for will The in regulatory look to want change? the bank needs customers serves which their customer on what largely and depend will which meeting just involve only’, are. can They ‘compliance seek to choose sharing and data withregulatory requirements of compliance the regulated parties this Whilst request. that customers this implementation, be a cheaper is to likely risks with threats and come could the bank; considerable to may as customers servicesproviders value-added seek benefits that canfrom offer operational and services, added value technology.” additional the new capitalising on James McMorrow, Senior Manager, Payment Strategy and Business Development Strategy Development Business and Payment Manager, Senior McMorrow, James Banking, Lloyds Bank Transactional Global for also sees opportunities. “The ‘open’ a significant introduce threat to competitive appear may PSD2 behind philosophy barriers “The says. proposed he entry traditional to for banks,” are some low to third could banks parties, challenger vendors technology and the for and openings opportunitiesof for them actuallyworld newbe PSD2 wide-ranging. a offers But meet to with how working understand and to technology clients through embracing efficiency.” their future operational needs improve and will be that several will providers the banks access the get to to be approaching accessour systemsto they be opportunities offer could there and need, us to for infrastructure. opportunities.” of So see overall, a range we banks about staying “forget servicing as only account service should payment We “Banks BPCE. at will Denèle says creative and be innovative (ASPSPs)” providers “Banks says. he with expertise,enough, enough also become to AISPs PISPs,” and discussions with of a lot had banks have will within We in the space. TPP the play bankingFrench community this and is banking the case my as We well. for group are having discussions strategic chain will in we and the value roles in the new play digital will which space from this framework.” evolve legislative those providing services that and there TPPs, become the capacity to have today

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” MIGUEL SIMÕES, HEAD OF IT, BNI EUROPA BNI HEAD IT, OF SIMÕES, MIGUEL The adoption of instant payment methods, enabling immediate availability will of funds, immediate of instantThe adoption payment enabling methods, payments non-instant methods. outpace traditional to customer-centric interactions. This change will promote increased competition and new new and will promote competition increased change This interactions. to customer-centric cycles. to shorter leading innovation ultimately entrants payments the market in industry, The enforcement of PSD2 and open APIs will drive a shift from bank-centric interactions interactions will drive APIs a shift open from bank-centric and ofThe enforcement PSD2 “ platform which serves which platform all units in the Nordea.” product can create a platform on which we can build for the can future. we which for on can build a platform Our create strategy is also strength our activities building one gather so we into consolidate into Nordea strategy is to make Nordea fully compliant – that’s a given of course – but we are we course – but of a given fully – that’s strategy make is Nordea to compliant trying as it an seeing opportunity this do generate to manner, in to a proactive we believe “We he says. Nordea,” but for also our customers for only not benefits unconventional revenue streams that will revenue API an infrastructure.” open unconventional leverage “Our PSD2 seestoo compliance. the opportunity beyond Nordea go at to Berger secure communication and open APIs for payment initiation service initiation payment APIs and for providers open and secure communication service information account the near “In future, Simões says. providers, will we and models business new of focus our towards theincreasingly development move Currently, BNI Europa is focused on actively engaging its IT engaging is focused actively service Europa BNI on Currently, provider authentication, as customer strong community aspects key “such around PSD2 of importantly – to benefit from the significant business opportunities significant importantly business from the benefit – to that will arise from the legislation.” market disruption and promote new banking paradigms”. “January 2018 is right 2018 “January banking new paradigms”. promote and disruption market working only is not Europa BNI as such, “and continues, he the corner,” around with ensure compliance alsoto the that regulation time, by most – and but Simões at BNI Europa says the bank “is conscious that PSD2 will the bank says that PSD2 Europa BNI “isSimões conscious at cause severe will banks encourage turn to processes design their traditional heads, on product starting first with backwardsexperience user working the channel to and and the says. he solution,” underlying compared to other Industries other is the to digitalcompared start a chance banks to space, have now the user experience that first. put Competition intuitive solutions designing more This could open up opportunities banks up This for open redress could to the balance in the digital suggests. banking “Where stakes, McMorrow has been the behind curve largely clients’ needs. Consideration should also be given to working with also working to be given should third parties needs. Consideration clients’ as in and a quicker working that enables solution innovative more this produce may agile than way more internal build.” The alternative he refers to as “regulatory plus”. “This will both meeting as involve to “regulatory refers plus”. he alternative The regulation identifying and opportunities the bank to that can meet and value add

” JAMES MCMORROW, SENIOR MANAGER, PAYMENT STRATEGY AND BUSINESS DEVELOPMENT FOR LLOYDS BANK BANKING TRANSACTIONAL GLOBAL Where banking has largely been behind the curve the the is to Industries compared behind been other largely Where has banking digital space, banks now have a chance to start designing more intuitive solutions that that solutions to intuitive start more a chance have now banks space, designing digital product traditional to first. turn banks experience user willput the encourage Competition processes starting and heads, design their on first channel and with experience user the working backwards to the underlying solution. “ The emerging thinking around the inter-relationship between thinking emerging banksThe is fintechs and the inter-relationship around coming from thefintech propositions the new of some that banks embrace should their existingbringing that will offerings, space new functionality complement disintermediating completely without way) efficient and a timely (in customers to offer hasto the contrary fintech bring on the to best what them them; of enabling a trusted of the umbrella bankunder relationship. the future” the trick banks – but for willsmart “find dealing be to of ways with this, with collaborating these third probably and party in that provides a way providers think “I the third partythe best the customer”. experience for will providers actually goodhavinglot with banks. from collaboration a a the of benefit them Instead suggests. Berger us, I thinkreplacing will we be serving together,” the customer to will takes Europa BNI Simões a similar at “PSD2 contribute definitely view. is extremely likely It landscape theimproving industry. in competitive the payments will entrants market that and from new the fintech and internet from the emerge that banks foresee social of media the will industries. establishment We promote says. he partnerships with those players,” by “making it more widely available to the owners of that data – the customers that data the – the owners customers of to available widely “makingby more it also data see the opportunity “We more accumulate continues. to he themselves”, a better give them that view to their data. on consolidate to and customers for I am really thrilledand the modern opportunities creating more about of technically much services advanced the and possibility enable customers, to our for betweenparties different integration closer in market is reallythe fascinating.” realise certain to that have for accept and – “we may changes be some may There providing else the or interface be will there someone segments customer probably of the the device way will through that’s the customer which the payment: initiate The potential there is for the banks isthere data for potential make The better to their customer use of

capabilities real-time corporates real-time new need will liquidity management Mahoney: Given

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GUNNAR BERGER, HEAD MANAGEMENT CASH NORDEA OF SOLUTIONS, GUNNAR BERGER, integration between different parties in the market is is market between the parties in different integration really fascinating.” more modern and technically advanced services advanced our for technically and modern more closer much to enable possibility the and customers, I am really thrilled about the opportunities of creating ofcreating opportunities the about thrilled really I am “ without having the risk of market cannibalisation,” he says. without having he the risk cannibalisation,” market of the disintermediation of the payments value chain value the will payments of an present the disintermediation definitely a non-card-based acquiringopportunity model, business merchant develop to will definitely be a challenge for most banks,willtraditional for be a challenge mainly definitely whose those the fees from on card-basedbusinesses highly transactions. depend a Being card-basedbank currently have which acquiring business, does not merchant How challenging the A2A component of PSD2 proves to be for banks be for to will proves PSD2 of challenging the A2AHow component their existing on “A2A Europa. BNI Simões businesses, depend says at somewhat account. It is rare you see something that will completely replace a bank’s offering – a bank’s replace is see rare that something will you It account. completely way.” or in athe fintech do something different will different either and A2A.and with are are looking who having challengers many conversations “We access open lookingto downtake and not and PSD2 they are the from benefit to financial “They offer says. services to want Box banks,” to a bank addition in And Box points out that the fintechs are partner out lookingto And points also PSD2 Box around provides an opportunity to more deeply embed themselves in customer business business in customer themselves embed anprovides opportunity deeply more to lessand processesexecute,” costly make to those to and processes efficient more says. he opportunity, agrees NAB’s Langley. “If banks “If third can Langley. agrees party embrace opportunity, NAB’s capabilities thisthen solutions, customer these into formulate others from fintechs and and Leveraging turn to partnerships A2A of is route the challenge a viable an into

” LEIGH MAHONEY, HEAD OF PAYMENTS PORTFOLIO, GROUP PAYMENTS, ANZ PAYMENTS, GROUP PORTFOLIO, HEAD PAYMENTS OF MAHONEY, LEIGH globally and if we want those multinationals as customers – even if we are not specifically customers not as if we specifically are – even if we want those and multinationals globally a world to operate operates that a in ourselves in preparing – we are impacted by PSD2 similar way. fuel the integration of our multinational customers in Europe. What’s going to happen is is to happen going What’s customers Europe. in multinational of our integration the fuel same the way in will want business to do Europe in business doing multinationals that In our view, open banking and Open APIs are important are APIs Open because to and us will for they help banking open view, our In “ our corporate business it is already possible to receive account information information account receive to is already it business possible corporate our via banksfrom other example payment Swift, send for to also possible it’s and instructions. The implementation of payment initiation and account information services is corporates totally normal.” for less of a commercial need for additional intermediaries additional in a commercial for this need less of overall The space. increasing security risk focus cybercrime on of more commands and much both by their and corporates bankingprotection partners.” Swift at agreesVersmessen already that we “in banking see the corporate world online the banks of corporate offered “Most have solutions”. sophisticated quite instructions at send payments to portals for been able have corporates and bank.” another Cash Services,Management Product Lab, Innovation Rainer Wolff, ServicesCommerzbank Transaction Financial and “In Institutions, adds: Another evolution of the banks’ of thinking is A2A and an PSD2 Another evolution during about 2016 opposed banking (as open corporate of for increasing the implications focus on “The of space sees everyone this Not evolution. retail) purely customers. to servicesTPP has thus far been associated primarily with says the retail space,” services information “Regarding account do we provision, Wandhöfer. Citi’s a European solution, add to so exciting not this It’s corporates. our already for it initiation, payments to comes it When global. something alreadyif have you with will corporates clear yet whether the retailis engage and not follow model partiesadditional Security processes payments. initiate to authentication and between banks and corporates are already very appears there and sophisticated Building on the retail story

of TPP servicesof TPP so far more associated with retail Wandhöfer: Space

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” NATALIE WILLEMS-ROSMAN, HEAD OF PAYMENTS, GTS EMEA, BAML EMEA, GTS PAYMENTS, OF HEAD WILLEMS-ROSMAN, NATALIE Corporates are looking for their banks to continue to innovate and provide market leading leading provide and market to innovate to continue banks Corporates their for looking are them in multiple spaces, to provide an overall connected experience and help them be them help and spaces, connected to provide overall experience an multiple in them successful. not necessarily looking for the market to fragment further – which is a risk with PSD2 with a risk further PSD2 to is fragment – which market not the for necessarily looking payments new with corporate entrants. experiences encouraging our clients Our suggest from providers can help which play, a wider relationship for looking are ultimately they services. provides PSD2 a platform place to take to generate and these for innovations benefit will but clients, also to offer banks allow will not only This playing a level field. corporates are creativemore services payment account and Ultimately, solutions. “ in addition to then deliver rich data and analytics to the corporate,” he says. “This rich says. data analytics and he deliver then to in addition the corporate,” to better the corporate help the to business into can back information be plugged instance. for capital, Leveraging their working understand standardised data in chooses to use the bank as a provider/aggregator of choice, there is there an opportunity choice, of use thechooses to bank as a provider/aggregator but cash and multi-banking management payment deliver to only the bankfor not successful.” customer corporate a multi-banked example, Lloyds agrees. for at “If, McMorrow entrants. Ourentrants. experiences with suggest they ultimately clients corporate our in them can which from providers help play, a wider relationship are for looking an be them provide overall connected to experience spaces, help and multiple account services solutions. Ultimately, corporates are not necessarily are corporates not the for looking services Ultimately, account solutions. fragment further to market is – which a risk with payments encouraging new PSD2 innovate and provide market leading services. leading market for provide and a platform provides innovate PSD2 This playing field. will a level not generate to take and to place these innovations but willand clients, payment more benefit creative alsoonly banks allow offer to But that doesn’t mean there isn’t an opportunity the banks, for mean Willems- here isn’t there that doesn’t But to their banks are for “Corporates looking continue to Rosman continues. PSD2 – such as access to accounts and consolidation of account information – that information account of as access – such consolidation and accounts to PSD2 a while through for Swifthad have corporates 940s.” and MT101s continues. “If you look at the consumer space there are quite a lot of new entrants new of a lot are there space quite the consumer at look you “If continues. take to effect,but buildingalready businesses PSD2 waiting and active. They’re for are Alsowe that less in features space. seeing the corporate of of are there a number are absolutely wanting to know and hear more – and they – and are their banks wanting hear and know to looking more to are absolutely dynamics The says. she she space, arein different corporate the it,” provide to There is certainly a growing demand for information about PSD2 from corporates, is certainly There PSD2 about information a growing for demand EMEA, GTS Payments, of Willems-Rosman, BAML. Head Natalie says “They are clients our and awareness is there more but still the beginning at their journey, of information. Today this is done in a more static fashion, based on balance based and on fashion, sheet static in this a more is done Today information. why and This is the information. upside enough have records, because just don’t we APIs areopen so helpful.” receivables management, the services. fulfilment online toand of-goods management, able Being receivables make real-time the of real-time from the bank payments implies enabling account desire will the additional where from in the come That’s bought. the thing have you corporate world.” Banking, Transaction Standard Management, Product Rollin, Director, Jordane Chartered, also sees opportunities A2A and as PSD2 innovative a result of offer to he credit decisions,” sophisticated more services be faster, could “One corporates. to than information today. is exchanged more of the exchange allows for “PSD2 says. payment latest the on corporate’s base financeImagine could a trade decision if you conjunction with be important could in services creatingconjunction PSD2 new corporates, for certainly HSBC, Innovation, of Head Chazot,observers Group suggest. Christophe instant and will connected sources information payments of sees that “PSD2, ANZ at Mahoney really also identifies treasurers’ make corporate lives easier”. in light seecustomers the real-timecorporate as trend significant. payments “We real-time to that has banking traditionally the move theof integration at looking through Swifthappened file-based and means accepting toand that move with the says. he real-time happen,” dynamic that to is there a more for need Corporates in will capabilities this context, liquidity management new need this is corporates real-time of for side “The other adding: continues, Mahoney allowing banks better their customers.” to understand Swedbank is also examining will cash corporate our PSD2 the on “impact have confirms INilsson. “There offering”, can seethe possibility a of single management corporate are a multi-account if you you access and support information to of point digitalbank one – the possibility bank, receiving based have on to not account through banks initiation from all holding payment sending and account statements multiple internet banks.” as theOther rise – such drivers change instant market – in of of payments this way could significantly reduce the operational burden on clients, whilst on clients, thisburden also significantly could operational way reduce the the same APIs they will will they APIs same the useless be Lyon: If everyone makes Lyon:

20 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 21 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM

JORDANE ROLLIN, DIRECTOR, PRODUCT MANAGEMENT, TRANSACTION BANKING, STANDARD CHARTERED STANDARD BANKING, TRANSACTION MANAGEMENT, PRODUCT DIRECTOR, ROLLIN, JORDANE could base a trade finance decision on corporate’s the latest payment information. Today latest the Today payment information. corporate’s on decision could base a trade finance based because records, balance static just a more on and we sheet in fashion, done is this so why are helpful.” APIs and open upside the is This information. enough have don’t PSD2 allows for the exchange of more information than is exchanged today. Imagine if you if you Imagine today. exchanged is than of information more allows exchange the for PSD2

“

05 OPEN APIS: ORHELP HINDRANCE FOR BANKS? pass, will we the opportunity up opens bank.” be a marketplace react. to PSD2 open up to marketplace banking. That’s the idea and PSD2 fits very fits PSD2 and nicely the idea with banking.this marketplace to That’s up open idea.” to open the of riseslightlyAPIs. is incidental PSD2 too, Monzo at Blomfield For able “Being says. he as are we a bank,” company a technology are as much “We from queries an to API functional respond to is stack pretty straightforward is this us. PSD2 thingfor in the future pass does to ifwe and it come that may will ties it in react. with of Our take to plan advantage the opportunity be a to data via provide to prettyformats APIsis bank. inmarketplace different able Being straightforward to future in clear the us. The does UK – if come it is PSD2 not for of mention of APIs as the means by which A2A be facilitated. However, the fact that APIs of as the means A2A which by mention However, be facilitated. this mention key done to acronym three-letter has omit the official documents the growing banks that conviction temper among to nothing beyond and in Europe requires. that PSD2 the openness APIs are enabling the to key AsThis is in PSD2. Roberto part no or because PSD2 they are coming anyway, “With ItalianFerrari, of our General digital says: Manager bank CheBanca!, middleware – specificallyin going we thismiddleware – end are our direction front We API our gateway. because are into we putting already information into looking APIs, digital because 700 already believe we have APIs banking about is very much seamless a need architecture integrated are that. We we and to getting for ready As Citi’s Wandhöfer points out, neither PSD2 nor the make EBA RTSs any explicit nor PSD2 neither out, points Wandhöfer As Citi’s

bank become a marketplace a marketplace become Blomfield: PSD2 ties in in ties PSD2 Blomfield: with opportunitythe to

” JOHN BOX, HEAD OF STRATEGIC PARTNERSHIPS, PAYMENT SERVICES DIVISION, RAPHAELS DIVISION, SERVICES BANK PAYMENT HEAD STRATEGIC PARTNERSHIPS, OF BOX, JOHN We are talking to people all the time that are looking to benefit from PSD2 and open access, open and to benefit looking are from PSD2 that time talking the are to people all We and they are not looking to take down the banks. They want to offer financial services They want to offer down to not take looking are they banks. the and financial replace a will completely that rare account. see is you It to something a bank addition in different a different in or something way. do offering will either fintech – the bank’s “ among them external facing APIs. We are using a small number of technology technology are external of them using a smallamong number APIs. We facing partners continues. assist he to this process,” aggregators to enable more retail consumer propositions”. Similarly, Langley Similarly, retail more propositions”. consumer enable to aggregators restructuringand “APIenablement internal confirms NAB in that engaged is third betterarchitectures, party to embrace operations and technology capabilities”. internal 150 APIs, covering some strategy, “NAB API has enablement a robust multinationals doing business in Europe will in business Europe doing inmultinationals business the same way do to want if are we – even globally not if those want and as we multinationals customers that world in a operate we preparingto – specificallyourselvesare PSD2 by impacted in a similaroperates way. integration developing and door the front a strategy up opening have around do “We respect to of “though the have fact that we a lot continues, he through APIs,” said, the bank That through is traditional is mechanisms.” done integration our the across organisation”, an back API to create front stack to right“working now “leveraging APIs external our to a strategy adds, includes and which he clients confirms Willems-Rosman. “It’s what the market is moving to and what clients are clients moving what to market is what the and confirms“It’s Willems-Rosman. we a movement it’s and “This says. the across world, she is happening demanding,” be a part that to as need feel we an organisation of.” banking towards the trend open That regardless APIs driven is open happening by is confirmedbanksof PSD2 by fact of the that outside on are APIs agenda high the “We in only a limited are way. – or impacted PSD2 by impacted are which not Europe mean we that doesn’t with but in market core our required PSD2 are comply to not ANZ. banking at open Mahoney says Open and APIs view, our are “In can it,” ignore us multinational our becauseimportant of they for will fuel the integration to help is that these happen to going based What’s in or Europe. operating customers BAML also views “PSD2 as just one of the reasons we are implementing APIs”, APIs”, BAML the reasons are of also we implementing as views one just “PSD2

22 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 23 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM

” COLM LYON, CEO AND FOUNDER, FIRE FINANCIAL FIRE SERVICES FOUNDER, AND CEO LYON, COLM account providers open their APIs and be happy to services integrate the be happy What and APIs providers account their open of others? accounts their want to keep them customers will that make give to their can honestly they opportunities other for There are disintermediated? are if they will feel they How place? in authorisation: secure access the outside around layer example – for engagement customer a notification to out customers to stop provider sending source account the nothing is there party bywhen a third a transaction initiated occurred. has app Banks and fintechs need to be very fintechs and to play not. – or Banks where clear about Will going are they “ in the PSD2 required in the time-frame PSD2 available providing “true’’ – the way a APIs work: to code in want you as “If a fintech says. he access,” URL for need the and code you have don’t because you probably it’s can, can’t you if and you minutes, the next 10 the rightexpertise. banks the confident I am Of it quite course will role. play their will because take the banks wedate, time but the due are by used well complying to the choice.” have don’t them tackle this challenge – which will, as mentioned above, be bigger for some some for tackle bethem bigger this will, – which above, challenge as mentioned banks than others. for banks for in having challenges not in the is exposingbut APIs view, In Blomfield’s “If says. he is “The that successfully. thethem banks irony all APIs already,” have account your fetching access bank to it’s your account, application usemobile a you those documenting publicly isabout just existing bank’s data from your API. “A2A” third-partyAPIs enabling and access.” “Several the banks BPCE, at APIsIn the are already. on view working Denèle of banks APIs make are and on publicly them to ready in already France worked have open APIs? This will its existing theAPIs? bank of on open the and state technology depend banks, multinational large or is a fact it “For Egner. architecture, suggests EBA’s that they cannot state-of-the-art transform systems core into legacy architectures service build they to need enable the next. to to Therefore, layers month from one successful operation in the world of open APIs.” almost without saying goes It banks that established with systems will legacy find via up challenging APIs open to than more it will with entrants new infrastructure clear that many traditional In players an this API-driven for it’s built context, world. help to capabilities, as API such management tools, are for in right the market now So how challenging is it for established banks with established challenging up for for keep isSo to it the how demand

to different banks different to solutions to connect to connect solutions Versmessen: TPPs TPPs Versmessen: two or one want will at the Euro Banking Association. “Our whole ethos at EBA is to encourage a the Euro Bankingencourage EBA isat ethos to at Association. “Our whole tackling to comes industry it when in the challenges approach pan-European the apparently of that some out points said, he That says. he space,” collaborative a wider solution base activities for solid are way in fact a more ‘national’ under the banks example, in the UKthan that the are to “For responding seem. they may the competitive Authority Markets and improve to the Competition of requirements they and players, are international banking open landscape 2018 introducing by by will of that successfully see in a framework place to want the supports development borders.” across that also work solutions easy, straightforward beeneasy, pretty the UK In have of there the market context path. with In the wider European so far, HM Treasury the forefront. interactions at good at in this the way are we is approached less cohesion seeing being environment this in If mean the fragmented. EBA time, the may result which point is more take to the bewere same focus a reassuring that HM Treasury would it is pushing Willems-Rosman agrees adds. Oddy that see that,” to be keen would we and step generally do clients because our ultimately be very“standardisation would welcome, deal withbanks”. different agrees Egner outcome, is be a threat a disappointing would and – Fragmentation canned and not on-demand – so it’s a significantshift exchange to the enabling – so it’s APIs, canned on-demand not and trend is one PSD2 with in interactivity. snippets, as when and information more of it, enable to driving has APIs, the technology components our and for demand though they necessarily are not all connected yet.” than challenge greater creating APIsThe will in a standardised it be doing way, be very would this easy bank each do to different for in “It a subtly reckons. Oddy is which all PSD2, about of the intention not thus meeting but the letter way, flexibility sufficient in our have “We says. he commonality synchronisation,” and deal to with so. is there technology the expense doing but changing of requirements, are trying the future to asWe a line as short a nice, possible need clean, – we plot to Robert Oddy, Global Head of Treasury of Architecture,Head Banking Wholesale Global Global Robert Oddy, BAML, aligning of down the challenge with plays the API “We trend. Technology, says. he data through in accessingfrom clients APIs,” interest client of a lot seen have a digital years.“From 30 It’s strategy for been electronic perspective have payments existed have in the capital market If you a particular internally. such work not of level been several industry have there space, initiatives bring standardisation to ISDA, – APIsTWIST, are FIX information. easily exchange more – driven theto need by industry The doing space. the has corporate at been that good into of the extension these of efforts anpastof of extension the is more this are we now seeing what and through a series messaging been done pre- of based interfaces– not years.30 It’s Fragmentation: the enemy of efficient open banking?

on a standard for on limit could now APIs innovation Denèle: Starting work Denèle:

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” ROBERT LANGLEY, ENTERPRISE ARCHITECT, PAYMENTS, NATIONAL AUSTRALIA BANK AUSTRALIA NATIONAL PAYMENTS, ARCHITECT, ENTERPRISE LANGLEY, ROBERT these into customer solutions, then this provides opportunity this an embed then solutions, these customer to deeply into more processes business those customer processes in to make and themselves efficient more lessand costly to execute. If banks can embrace third party can third embrace banks If others formulate and and from fintechs capabilities “ least I hope not,” he says. “We need to have competition in data services competition have to need in as do we “We says. he not,” least I hope APIs arepayments. brilliant makes if everyone the same APIs, but they will be useless. nurture smart to good, need – aggregators of on APIs the creation rely then and We banks; they 1000 integrate Amazon won’t API authentication. – for providers gateway thing a good already technical what seen have access gateways We will use a gateway. APIs and are PSD2 creating the are. In this Payments way, networks like Faster for been before.” there that haven’t opportunity models business for has to be a question about whether that will help the European consumer as much,” that will whether the as European much,” consumer about help has be a question to will the uptake will and be solutions, less good of is there a plethora take “If says. he banks. different connect to to If will two you or solutions one want As a TPP, longer. will arethere many it too a pity from an of access be a bit perspective.” Standard Rollin at CharteredFor “if standard, is there no the industry will all have will banking. from open “It be very upside” clunky no and the downside if every bank won’t “We he says. me way,” to that hasmust its owncome the API, fintechs says and interoperability.” of theupside have be Fire a standardised at expresses a contrary APILyon “There – at won’t view. are having a dialogue to do with to banks have we other see what to Europe across not but framework a Nilsson. “The says provide RTSs standard,” a good to come are fully doing to We that will open a standard, be done. to so somewhere have with something the community.” bank PSP and also between expects HSBC EuropeanChazot banks at see “collaboration to in order new standards these PSD2”. for implement define to the for APIs the potential does on open prescriptive factthat are the RTSs The not Swift. at forward, agrees going “There Versmessen solutions numerous of creation Swedbank is also pushing to see a standard for APIs, created by the industry. “We Swedbank “We is also see the a standard industry. by to APIs, pushing created for 20022 elements, components or approved message definitions, if available, since available, if definitions, message approved or components elements, 20022 these standards between within are and already sector, used widely in the payment States.” Member The future of integration? future The services of from moving corporates, on for a nextIf APIs generation can enable has via been achieved what messaging services like Swift, if and APIs are positioned established does that mean for what technology, integration of generation a new methods used betweencommunication forward? banks going their and customers strand continuity the is draftOne by suggested of the use of for push which RTSs in all servicing text between20022 account The ISO and exchanges TPPs PSPs. technological communication different of ensure the interoperability “To states: require servicing to that account service payment is appropriate it solutions, standards open and uses interface are common which communication provider’s European standardisation or as international organisations as well by ISO developed been done. They are still to be done. It’s something relatively new, and starting and new, on relatively something are They It’s stillbeen be done. done. to harm and would in innovation yet place that something is not a standard for now limit will and the initiatives that happen harmprobably ultimately the ability some of the initiative in they the way A better want. leave is journey to operate to players with is compliant the can they it so everyone the provided want market what to do a time for in If is a standard something terms needed RTSs. of there’s will it emerge: see to incredible be quite a standard.everything, would the time for It not it’s and the time they at just regulationthe limiting to regulators are introducing innovation foster innovation.” Denèle at BPCE agrees that now is not the time for a standard. “APIs have not not have a standard. the time agrees for is “APIs not BPCE that now at Denèle

26 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 27 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM

” FABRICE DENÈLE, HEAD OF CARDS PAYMENTS,& BPCE and PISPs. Banks will play in the TPP space. We have had a lot of discussions with banks a lot had of have discussions We space. will TPP play the in Banks PISPs. and well. as We case group the is my banking for this community and banking French the within digital the in we will play and chain roles value new the strategic in having discussions are legislative from this framework will evolve which space Banks will be innovative and creative enough, with enough expertise, to with become AISPs enough creative will and be innovative enough, Banks “ Change is being driven by other key factors – the underlying digitalisation – the key underlying factors of key is driven being other by Change the better banks’ the needs to meet as invoices, determination such documents trade – and innovation fintech of try the to power the and trend integrate customers, to of APIs is open in facilitating these, for Rollin place suggests. and the main of impact APIs open where really we “If that’s then alignment, these want into drivers come to can everyone which – providing integrate.” a standard into play layer into come that something has happened – messaging is better. You don’t want to have to query to have to want don’t You – messaging is better. that has something happened first.to both. So advantages disadvantages and are actuallythere An could API complementary some banks, be for a need could there of a widereach selection but contends. he messaging by provided technology,” capabilities APIs will open to far Rollin the change, move how herald of On thequestion trigger marketplace to a new is going what are not Standardat Chartered “APIs says will still “You a central need a central a or banks”. authority or system for will what are the not infrastructure power “APIs says. be he data to for blockchain,” that infrastructure.” into will They plug’ exchanged. the ‘USB provide payloads will be based on the same standard”. The ISO 20022 data field dictionary data field 20022 ISO The willpayloads be the based same standard”. on messages whether the but he says, any missingcan fields, cover to be extended be verifiedit to required need – is although would the coverage have concerned already are and therefore are part that many PSPs SEPA of important remember to will that and many TPPs messages, 20022 ISO be banks.sending will APIsAs messaging-based and integration how out to co-exist, points Versmessen “APIs are useful in a typetypical client/server technologies”. that they are “different querying frequent bi- be carried is there to for a need where For environment out. directly inform like bank another to would directional one – where communication This is a positive development, suggests Versmessen, “because means it that all suggests the Versmessen, This development, is a positive

06 DEFINING YOUR ROLE IN THE ECOSYSTEMDIGITAL account providers open their APIs and be happy to integrate the services integrate to their APIs others? be open and of happy providers account that will canWhat their customers give to they honestly keep make to want them will How are There if they they feel their are in accounts place? disintermediated? example the – for access layer outside engagement opportunities customer other for provider the source account stop is there to nothing securearound authorisation: a transactionby a when initiated thirdto partycustomers a notification out sending has occurred.” app Lyon at Fire banks at also for I sees as “The as entrants. well an music Lyon new upside is the same as has to listen I am it always been: way consuming just in a different it David Bowie is still brilliant,now. the and banks says. he are still relevant,” does want it the role upon think decide must and every about player However, the tree of are the in ecosystem. top the the access new If at – play providers to are there says, also the access – Lyon engagement handling the customer of most “Banks consider. to roles provision the and account API authentication for gateway Willnot. or – play to going verythey where needto arebe fintechs and about clear ecosystem does not seem to be a difficult one. Citingone. be a difficult to seem ecosysteminitiatives doesunder not already its banking integrate services to transport and way with things of (IoT) internet as being all“pulling proposition around in the positions Blomfield applications, will developers dataavailable, make your you ““If contextual more data”. much the present prototypescreate “APIs will a few – and says. he turn businesses,” into well-served by aren’t who customers for products opportunity valuable build to strugglingpeople accounts, banks. house-shares. with joint Family student debt, underserved segments.” really for build targeted propositions developers let They partner could who entrants with new of to shortage course other is each no of There banking, marketplace are to turns if providers less keen it enable the incumbent out so. do For new entrants like Monzo, the question of how their businesses fit into the digital their businessesinto fit how of the question like entrants Monzo, new For golden opportunity for innovation for banks Berger: PSD2 is a

28 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 29 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM providers adopt new technology and payment journeys to meet changing meet journeys to customer payment and technology new adopt providers bank As will with we demands. to closely relationship a customers our work the changing meet their ensure needs digitalunderstand that our to and solutions the future.” of demands customer A critical banks aspect the for journey of will be partnership with rivals, their former co-operation see some would with“I fintechs suggests HSBC. theat fintechs, Chazot be better might to “It says. this– and he than rather – is with new competing them,” the best services deliver partner to in order customers.” our to underpin this vision, she adds. “We will partners, “We thisunderpin a variety ventures, have adds. join vision, she of Thisbank.” is something hasfor the journey that a been relationships. different also PSD2 digital positions the bank. as McMorrow for a journey “As Lloyds’ expectation our is that client the industry of categories will new introduces likely “The says. he user experiences,” and models payment online new of see the creation experience direct using payments a secure fromability provide shopping online to cards,bank to willpotentially accounts improved solutions alternative provide retailers an capital potentially for and working enhanced user experience for expect time existing as and that will the We market new over customers. develop It is clear that EuropeanIt banks in the digital establish their roles are to working beecosystem to want align to and their digital “We their goals. achieve strategies to Swedbank, Nilsson says at “covering the digital service customers,” our for provider banking services only other activitiesnot Our but them. PSD2 for that are relevant are partto a efforts our digitaland to create our of with customers, relationship Swedbank to see and on log in – so you relevance that digitalprovide relationship the contextualeverything That’s run that is vital to everyday economy. you your for part it.” of everything IT develop to department Swedbank’s required for to is plan not The providing data than API connectivity, via more they need they gather which could thetransaction, for creating a data set via really they offer which could interesting do If the banksservices example. don’t for transaction around management, fraud this, others will.” Swift at also to Versmessen a service sees be the for developed need to layer API-driven an of open ecosystem. “There is thesuccessful facilitate implementation a technical in setting challenge importantly an API up more framework, even and a trust the ecosystem, for for “There is manager says. a role he isthere a trust issue,” clarifying been accepted.” have you are as whether and you a TPP who The “hidden gem”, he says, “is the data”. “The banks layer a new create could “is the says, data”. he gem”, “hidden The innovation in labs and sandboxes but there is a challenge in making is there a challenge but that innovation in sandboxes and labs innovation is the mainstreamscale into bringing collaborate and back to way it The business. This solutions. systems of and of interoperability allwith about APIs, it’s and open still the banks have acting You as overall providers the best both worlds. of enables perspective the and from compliance and scale a legal they can bringis still there, banks’ the theinto then and fintechs ecosystemsplug can open via APIs.” on specific solutions “that specific will solutions parton as payment a seamlesslyorchestrate of end an are that payments a means just believe “We says. he experience”, customer end to services payment as and an such to end commoditised. will more and more become constraint face that we the major secure and payments: reliable in of live an age We that and experience significantlytoday speed is reduced customer in impacts the the merchants.” and fundsof customers provision to in the themselves digital banks drive for The ecosystem for establish a role is to APIs is and open driving by enabled successful between banks collaboration and agreesfintechs, at StandardRollin Chartered. banks “The been carrying have out A shift to true customer centricity customer A shift to true APIs “will open and PSD2 of drive a foresees that the enforcement Europa BNI Simões says. shift customer-centric interactions”, to from interactions bank-centric in entrants “This market the new and increased will change competition promote of adoption The cycles. innovation shorter to leading ultimately industry, payments availability immediate funds, methods, of enabling instant will payment outpace traditional non-instant payments methods.” ReflectingBNI is Europa business,currently working changes payments these in the able to partner to with help partner anable to to ecosystem, create disruptors, to in order in the ANZ. example, at Mahoney says “For their goals,” achieve customers our ownership a better home have to customers our retail help like to would we market because because they but a loan need just not loan experience. a home want They Withinthey wish a house. the ecosystembuy in to financial services, ecosystemthe other sales leverage actually and additional could we capabilities, of enable opportunities with integrating by by through powered door disruptors, the front we are innovation the love services I providers other and our customers. benefit to harnessing with banking financial and servicesopportunitiesIt willAPIs. enable today.” of thought even haven’t we that perhaps Banks outside Europe take a similar view. “I would view our approach as being view take Europe Banks approach would our a similar “I outside view. lead to the development payment online of new models McMorrow: PSD2 will will PSD2 McMorrow:

30 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 31 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM forced to make to be compliant will opportunities. be makecompliant of to to forced also a lot create in own our innovative channels opportunity by “This more become to is a golden are that there are guys There extremely out community. inviting in the developer how but solutions, build to they and how know technology new about passionate willmany customers if they they organically? get try a Maybe grow their solution to opportunity can we and millionthe 11 them offer customers have We thousand? few in digital our will channels That towards their solutions those clients. launch to will it – and there be a great out opportunity be a great the best developers for within the bank.” in development our innovative opportunity more become us to for to one another to provide innovation to the entire space”, he suggests. “This he of is one theentire space”, to innovation provide to another one to has it implications Yes, happen. to true required for innovation elements the biggest a not It’s everybody. for an upside there’s but every of player, the model business for the bank of as providing the architecture is an There element sumzero game. the and landscapebut the – handling willthanfintech much richer relationship be the that.” an buying implementing and an for RFP have now agrees. out “We Nordea at Berger functionality good of the expect we of and a lot platform, out get to API management a number will we create that that based technology to believe on be then able We box. are we – so the investment PSD2 services beyond new that go of customers our for In this context, PSD2 is the framework that is needed “for players to be able to talk to be able to players In this is “for that the is framework needed PSD2 context, embrace open there arethere tools to ensure a streamlined to active role in callingactive role and for

and achieve coherence. achieve and , to comply with regulation, but also to go beyond it and it with beyond also go to regulation, but comply to , all an banks play should institutions, so some kind mechanisminstitutions, is of required so some ensure that the to situation kind standard This of be some could the around less coherent. not becomes more aggregators) by function (provided the marketplace of be some could it API or both. In any event, or fragmentation avoid effortsto to contributing and its customers need but nor will nor but need as many APIs its customers and as holding are there account One standard lowest-common-denominator API won’t deliver what the industry what deliver API won’t standardOne lowest-common-denominator is a challenge for banks and the open banking and open API element of this of banks is for banking is the and a challenge open API element open and and necessity invention of is the mother However, exception. no assist to the market banks on inaplenty achieving an transition to a smooth bankingopen future. these Banks tools leverage to need implementation of their open banking capabilities. For established banks, legacy systems are an unavoidable reality. Digitalisation reality. banks, established systems are legacy anFor unavoidable not just in Europe, but globally. Therefore, all banks should emulate the approach the approach all banks emulate Therefore, should globally. but in just Europe, not those interviewed many and of this the for leaders researchof and banking APIs open and deliver what customers need. Open banking will in financial which be the environment operate, institutions 07 CONCLUSION: KEYCONCLUSION: TAKEAWAYS 2)  2)  3) PSD2 in banking, practice are open PSD2 resolved, APIs, driven is becoming open by a banks The the realityreality. alter to will and increased of be able competition, not (anymore). to want part the most to appear is, for news the not they good do the banks’ of thinking,key this takeaways five of In light from evolution Finextra’s bankingthis open and research are: PSD2 into  1) However the remaining uncertainties (and conflicts) around the implementation of implementation the around the conflicts) remaining uncertaintiesHowever (and

32 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM 33 | PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM anks have and they should Banks partner with should fintechs that providecan , and to justify investment in the provision of orchestration and justify to and , orchestration of in the provision investment It may already becoming a cliché to suggest that banks should collaborate and already suggest that banks may to collaborate becoming a cliché It should not compete with fintechs, but for anyone in any doubt PSD2 and open banking open and PSD2 doubt in any anyone for with but compete fintechs, not practically Open APIs be makethe factors. deciding collaboration easier should banking theand changing landscape open of competitive makecollaboration commercially necessary. their existing that complement propositions customer compelling new interesting propositions relationship customer their offerings complete and agility do greater theto fintechs’ opennessthis technological in exploit and a timely manner. PSD2 is not happening in a vacuum, but it has to be complied with has be therefore and complied it to but in a vacuum, happening is not PSD2 has budget and resource attached to it. In this resource it. and is to attached a gift, it sense has budget b and drivethe opportunity to digitalisation PSD2 ecosystem and make of the to most thinking contextual This secure – capabilities. willand define in – to roles them their help the digital forward. ecosystem going 5)  5) 4)  4)

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Axway empowers more than 300 Global Financial Services organisations to PSD2 AND OPEN BANKING: DEFINING YOUR ROLE IN THE DIGITAL ECOSYSTEM collaborate smarter, innovate faster and engage better with their customers, partners and developers. From integration technology that securely connects people, processes and things to an engagement platform that enables API management, identity management, mobile app development, analytics for payments and critical end to end business interactions.

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