“In the UK, the Access-2-Accounts provision within Payment Services Directive 2 (PSD2) along with parallel initiatives including OpenBank and remedies from the Competition and Markets Authority (CMA) will introduce a new wave of technology and competitive openness. This new world of “openness” will likely present opportunity and challenge to both sides of the value-chain; banks and third-party processors.

David Hamilton
David Hamilton

 PSD2, OpenBank and the CMA remedies introduce “front doors” to data to which banks will need to provide third parties with keys. These freshly mandated “open APIs” will be a milestone in banking technology and regulation, creating tremendous industry buzz.

 However, considering the scope of each initiative and their projected implementation timetables along with their specification principles, it is apparent that PSD2, OpenBank and the CMA remedies offer access to the same thing; namely the end-users basic current account, albeit with different technical standards and implementations.

 Essentially what’s on offer are access to three different front doors leading into the same room. While all three initiatives address the scope of the basic current account, each initiative varies in its inclusion of credit card, overdrafts and savings accounts. Furthermore, only the CMA remedies address loan products, and these are in the context of business accounts only.

 With the average consumer and small business customer possessing a broad range of financial services products including current accounts, credit cards, personal loans, leases, insurance, ISAs and various other investment and credit accounts, the scope of these “open API” initiatives might leave some of us feeling underwhelmed when it comes to providing end-users with innovative, convenient and value-added services driven by a truly comprehensive picture of their financial relationships.

 One might even ask how, without a platform able to aggregate data from a comprehensive range of target institutions and a broad list of product types, a third-party processor could build a sustainable business model given how limited and crowded the front room will be.

 PSD2, Open Banking and the CMA remedies simultaneously introduce complexity and a narrow scope. The year unfolds with more questions than answers.”

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