With the PSD2 initiative arriving at the beginning of 2018, the UK Open Banking project is bringing the full spectrum of payment account types on board.
This move will include digital wallets and cards including both credit and prepaid, making them applicable to non-bank service providers in the wake of the new directive.
Working swiftly with the time that remains, the UK Open Banking project was brought into being by the Competition and Markets Authority (CMA), the body responsible for bringing major UK current account providers together to set out API standards for PSD2.
Imran Gulamhuseinwala, trustee of the Open Banking Implementation Entity, says: “Key to any innovation is the process of discovery and it became clear through the second half of 2017 that there is much more the OBIE could do to drive adoption of Open Banking and create a richer environment for new services.”
PSD2 poses an immense challenge to traditional banks that have so far enjoyed the full control of customer data, but the new directive will relinquish that control and open up customer data to third party providers of banking services. This means customers can choose to stay with their original bank, while leveraging the innovative offerings of fintechs and others.
“These enhancements should give even greater confidence to the fintech community to seize the opportunity to participate fully in the financial services ecosystem. They will create standards for future dated, recurring and international payments as well as all the payment and product types covered by PSD2,” Gulamhuseinwala said.
In terms of UK banks, HSBC has been ready to spearhead the directive as an opportunity, having already developed an open banking platform; this would give customers the ability to connect accounts held with other banks. It is essential that the established banks look to provide competitive, innovative services so as to avoid becoming a basic commodity.