The prospect of open bank APIs, or application programming interfaces, could change the way EU consumers interact with their banks, and increase competition among providers. The prospect is both tantalizing and terrifying, depending on who you ask.
At the PDS2 Discovery Day on 5 July in London, hosted by Payments UK, Lars Hauge, Corporate Services at Nets, joined the panel along with representatives from VocaLink, W3C, and Preta to discuss the core issues of PSD2. The interactive PSD2 Discovery Day focused on identifying the key challenges and opportunities arising from the changes and looked to identify key areas for collaboration to achieve the best outcomes for stakeholders.
According to Lars Hauge, the industry needs to work together to avoid PSD2 leading to a fragmented landscape:
"In my view, we need to co-operate across the industry to achieve the intentions behind the PSD2 with respect to access to account services, which is why we have established CAPS. The working group, which is open to everyone, works towards a common set of standards, and we do so through dialogue," Hauge says, pointing out the risk of leaving the industry with fragmented standards due to the sheer difficulty of complying with PSD2. In a fragmented landscape, companies with enough muscle, he argues, could have the upper hand, leaving behind the very companies that were meant to bring alternative payment initiatives to the companies and consumers, but which due to their limited financial capabilities may not be able to do so.
"The more room to manoeuvre legislation leaves for initiatives such as CAPS, where the industry helps develop the applicable standards, the more access it will give to APIs as the PSD2 intends, eventually giving consumers more choice. In other words: Common standards will increase competition, not unlike the way common Wi-Fi standards led to a plethora of solutions on the wireless market," says Lars Hauge, stressing that consumers need not fear third parties' access to accounts due to a high degree of consumer protection in the General Data Protection Regulation (GDPR) as well as in PDS2. In fact, both the GDPR and PSD2 strengthen individual rights.
The CAPS framework was founded in 2014 in response to the PSD2 and its intention of encouraging competition at all levels. Originally founded by Equens SE, VocaLink and Nets, the CAPS framework, which is open to anyone, has since been joined by SIBS, PayPal, Fidor, Bankgirot, Isabel Group, Open Bank Project, FIS and First Data. The participants in CAPS believe that standardisation – especially within access to account services – will lead to more competition between payment service providers in the post-PSD2 landscape.
For more information about Payment UK’s PSD2 Discovery Day, please click here.