PSD2: An Opportunity for Lenders to Leap Into Open Banking
Taking deposits and offering credit has been a steady business for banks for thousands of years, so it isn’t suprising that lenders are often behind the curve when it comes to adopting new technologies.
But now banks have an unprecedented opportunity to buck that trend and leap ahead, thanks to PSD2, the European Commission’s directive on payment services that requires financial institutions to provide third-party access to account information via APIs.
So says Paul Rohan, technology consultant and specialist advisor to the EU Payment Services Directive.
Certainly financial institutions will be required to open up and enable fintechs and others to access their data on the January 2018 PSD2 compliance deadline. But APIs enable much more than that, Rohan argued. The possibilities surrounding data consumption could be a game changer for banks, he said.
“They have to put extra data into the market to help the ecosystem grow, but on the other side, they can take data into their organization to improve their decisionmaking,” Rohan said. “That’s actually the thing that changes people’s mindsets to having an API strategy rather than having a PSD2 compliance strategy.”
Besides promoting the importance of API data consumption, Rohan urged banks to focus on educating employees with monetization responsibilities on the power of APIs, and to make permanent appointments to manage their API programs.
“PSD2 gives a focus to [banks’] projects—it gives a purpose to their investment in software architecture,” Rohan said. “I think there’s a strong opportunity for them to open themselves up."
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