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Fintech Belgium Summit 2017 - PSD2 - Anthony Verhelpen

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Another view on PSD2 by Anthony Verhelpen EY

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Fintech Belgium Summit 2017 - PSD2 - Anthony Verhelpen

  1. 1. Fintech Summit: regulatory session Another view on PSD2 14 December2017
  2. 2. Confidential — All Rights Reserved — EY 2017 2 Anthony Verhelpen Senior manager legal & regulatory t +32 2 774 97 76 m +32 472 80 08 90 e anthony.verhelpen@be.ey.com • EMEIA PSD2 subject matter expert • Regular speaker on PSD2 • Specializes in regulatory implementation and regulatory change management in the financial sector The story of today’s 7 minute talk A. Why payments have escaped the wave of disruptors 2” 1. No free access to payment infrastructure 2. Strong legacy of cards in the EU 3. Increasing costs/risks of compliance and regulation B. Lack of disruption… … until the arrival of PSD2! 2” 1. No free access to payment infrastructure  Banks must provide access to online payment accounts 2. Strong legacy of cards in the EU  PSD2 ensures competition with cards 3. Cost of regulation  But: cost of compliance & regulation remains high C. PSD2 put in practice for FinTechs 3” 1. Payment initiation services 2. Account information services 3. How can the Fintech connect to the bank’s online payment infrastructure? 4. How can the Fintech reduce its regulatory burden? FinTech Summit Today with you
  3. 3. Confidential — All Rights Reserved — EY 2017 3 Lack of disruption for European payments…. Welcome to the age of the disruptors battling for the customer interface Why payments have escaped the wave of the disruptors owns no cars owns no real estate creates no content creates no accounts Increasing costs/risks of compliance and regulation Strong legacy of cards in the EU No free access to payment infrastructure 3 2 1 Driven by the booming e- commerce market, the online payments market continues to grow fast both in mature and emerging markets. … despite rapid growth
  4. 4. Confidential — All Rights Reserved — EY 2017 4 The new payment services directive provides access to bank accounts! PSD2 and access to accounts enters into effect throughout the EU in the course of 2018 Online payment account Bank interface Client relationship Fintech (licensed TPP) ACCESS TO ACCOUNTS OWN CLIENT INTERFACE Lack of disruption…. Increasing costs/risks of compliance and regulation Strong legacy of cards in the EU No access to payment infrastructure … until the arrival of PSD2 But: cost of compliance & regulation remains high PSD2 ensures competition with cards Banks must provide access to online payment accounts
  5. 5. Confidential — All Rights Reserved — EY 2017 5 Examples of use cases Creating a software bridge between the merchant and the bank of the consumer Use case 1: payment initiation services Software bridge between the merchant and the bank of the consumer
  6. 6. Confidential — All Rights Reserved — EY 2017 6 Examples of use cases Client Client Providing the client with a holistic view of all cash accounts Use case 2: account information services Single interface Separate interface of each bank
  7. 7. Confidential — All Rights Reserved — EY 2017 7 Application programming interfaces (API) becomes the default option How can the Fintech connect to the bank’s payment infrastructure Embedded API (client uses only Fintech app) Redirecting API (client uses Fintech and Bank apps) Security Regulatory Customer exp. Client Default option: bank provides dedicated interface (API) Bank Customer interface Fintech API Client Fall-back option: Fintech uses client interface Bank Customer interface Fintech Interface must allow TPP to identify itself to the bank
  8. 8. Confidential — All Rights Reserved — EY 2017 8 Outsourcing of the regulatory burden, or automation of regulatory processes How can the Fintech lower its regulatory burden? Client Compliance as a service Fintech RegTech: automation of regulatory business processes Licensed platform Bank Licensed platform provides compliance services to the Fintech (AML sanction screening, KYC, GDPR, PSD2) Fintech uses the white-labeled platform to provide its services and reduce its regulatory costs Sits alongside existing infrastructure, governed and controlled by IT Emulates human execution of repetitive processes via existing user interfaces Robots are a virtual workforce controlled by the business operations teams Automated solutions work 24/7 Double-digit reduction in error rates Robots can be trained by business users 1. Account opening KYC ► Automation of the process to identify, gather and build the client profile to enable an informed decision of the acceptance of the client 2. Alert investigation ► Prioritisation of alerts for investigation based on defined parameters 3. Negative news search ► Robotically pre-process negative news search on Google for screening individuals and organizations Use case Description
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