The deadlines for implementation of the EU revised Payment Services Directive (PSD2) and the UK Competition and Markets Authority’s Open Banking Standard are fast approaching. With such a tight compliance window (January 2018 for Open Banking), financial institutions are feeling the pressure to meet the technical and legal requirements in time, and at a significant cost.
And to what end? The explicit aim of both directives is to break the banks’ stranglehold on the market by forcing them to hand over proprietary customer data, to surrender it to third parties eager to use that intelligence to disintermediate banks or redirect their hard-won customers towards other providers.
Many financial institutions have concluded that PSD2 compliance is not just a major sunk cost but a vastly expensive exercise in self-harm. Yet PSD2 and Open Banking also represent tremendous opportunities for any institution visionary enough to exploit them.
In this paper, we investigate some likely long-term scenarios and discuss strategic repercussions for institutions – both threats and opportunities.
To start your Open Banking journey at the beginning, read the inaugural paper in our Open Banking thought leadership series API as a customer product: Realising Open Banking potential.
Read media coverage on Capco’s views on Open Banking and APIs: