Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Payment Services Directive 2 (PSD2) 101

284 views

Published on

I created these slides in early 2016 to explain PSD2 regulation at a very high-level.

Published in: Economy & Finance
  • Be the first to comment

Payment Services Directive 2 (PSD2) 101

  1. 1. PSD2 101 Bharat Bhushan Industry Technical Leader Banking and Financial Markets, IBM UK @_bharat_
  2. 2. Josh Bank a Bank n Credit Card Provider Building Society Bank …
  3. 3. Josh Bank a Bank n Third Party Credit Card Provider Building Society Bank … Key points  Josh can authorise 3rd parties to access “payment” account information from account service providers  Josh then does not need to use the bank’s app to view balances or statements  3rd party may access and cache data even when Josh is not using the app  An account service provider cannot charge a third party any more than they charge the Josh
  4. 4. Merchant Josh Josh’s Bank Merchant’s Bank Acquirer VISA/ MC / AMEX 1 2 3 4 5 6 7
  5. 5. Recap  Josh did not have to enter any card details  His experience of buying a product with a merchant had less “friction”  3rd party authorised by Josh initiated the payment instruction  3rd party can prove that Josh carried out the transaction  Traditional acquirers and card networks were not involved (Merchant paid less fee)  Money is pushed out of Josh’s account(s) rather than being pulled. IoU is trusted by Merchant Josh Account Providers Merchant’s Bank 12 3 4 Payment confirmation £99.99 Third Party 5 6 7
  6. 6. Challenges • Losing a degree of direct interaction with their customers • Lower ROI on investments in the front office capabilities • Unpredictable workloads • Customers’ data is no longer behind firewalls • Increased potential for financial fraud and capital requirement • No contract with third parties • Increased liability, risk and fraud PaymentInitiationAggregation
  7. 7. Unknowns • Standards for APIs and Security • Third party security, on- boarding, risk and liability PaymentInitiationAggregation Challenges • Losing a degree of direct interaction with their customers • Lower ROI on investments in the front office capabilities • Unpredictable workloads • Customers’ data is no longer behind firewalls • Increased potential for financial fraud and capital requirement • No contract with third parties • Increased liability, risk and fraud
  8. 8. Opportunities • Embracing digital in its entirety; transformation to digital banking • Become the TPP (AISP and/ or PISP) • Monetise data and home- grown systems and platforms (KYC, AML, Identity…) • Provide/ improve financial advice • Create and deliver value- added services using partnership/ ecosystem services PaymentInitiationAggregation Challenges • Losing a degree of direct interaction with their customers • Lower ROI on investments in the front office capabilities • Unpredictable workloads • Customers’ data is no longer behind firewalls • Increased potential for financial fraud and capital requirement • No contract with third parties • Increased liability, risk and fraud Unknowns • Standards for APIs and Security • Third party security, on- boarding, risk and liability
  9. 9. Building Blocks What Next? Value add to your clients; needs led instead of product-led Assess your enterprise Data, API and security maturity Experiment and build early prototypes – FAST! Form your business and IT Strategy and perform gap analysis Expose and Consume API - Self service - Sandbox environments - Documentation - Policy - Hackathon Infrastructure - Scalable/Flexible - Payments - Testing your own Infrastructure Security - Identity Mgmt - Token Mgmt - Fraud detection - Crypto - Policy Org Culture - Customer focused - Design thinking - Governance - Agile/ devOps - Support desk for Customers and TPPs Open Banking Block chain Ask Us For More Details! Opportunities • Embracing digital in its entirety; transformation to digital banking • Become the TPP (AISP and/ or PISP) • Monetise data and home- grown systems and platforms (KYC, AML, Identity…) • Provide/ improve financial advice • Create and deliver value- added services using partnership/ ecosystem services Challenges • Losing a degree of direct interaction with their customers • Lower ROI on investments in the front office capabilities • Unpredictable workloads • Customers’ data is no longer behind firewalls • Increased potential for financial fraud and capital requirement • No contract with third parties • Increased liability, risk and fraud Unknowns • Standards for APIs and Security • Third party security, on- boarding, risk and liability

×