1/27/2024 0 Comments Moneymoney psd2 api subscription![]() ![]() Traditional banking is under pressure from low interest rates, much higher capital requirements which have reduced ROE and resulted in pressure from shareholders, 2 new entrants, including digital players, and shadow banks. Will existing players move fast enough to take advantage of the new environ-ment, or will new players gain an edge in some areas? There are also strategic challenges facing the industry itself. In Europe the move to open banking is regulatory-driven, but will authorities build a legislative framework which fully embraces the potential for future change? ![]() The digital revolution raises a range of policy issues for the authorities. This would create issues of lack of standardisation and reduced robustness and security. In particular will an open API framework be mandated or will the water be muddied by allowing access to ‘scrapers’ who access the data not computer programme to computer programme but through ‘impersonating’ the customer, using their passwords etc. Whether this future is realised to its full potential depends on the design of the regulatory framework that will accompany PSD2. The likelihood is that successful operators will be platforms offering products manufactured by a variety of players rather than just offering their own. Combined with artificial intelligence the rich data available on a customer would enable product need to be predicted and exactly the right array of products in terms of price and characteristics to be offered to the customer. But it also opens the door to new and much more sophisticated money management services. Aggregators will be able to tell customers the trends in spending, trends in saving as well as detailed analysis of spending patterns. This creates the scope for a jump in financial intermediation to a digital future. In Europe regulation is driving open banking with the Revised Payments Services Directive (PSD2) coming into law in 2018 and requiring banks to enable authorised third parties to extract data on a customer’s financial histories or to initiate a payment from the customer’s account.
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