OPEN BANKING OPPORTUNITIES AND RISK CONSIDERATIONS
Oikonomopoulos: How do Open Banking initiatives, including PSD2, affect future payment systems? What design considerations should organisations be aware of?
Parry: The Second Payment Services Directive (PSD2) became a catalyst for revolutionising Open Banking and the payment services space. First, by levelling out the regulatory playing field between the traditional payment services providers and the emerging payment services institutions, such as payment initiation service providers (PISPs) and automated interbank payment systems (AIPs), which are now required to be authorised and regulated. And second, by making it mandatory for banks and credit institutions to grant access – subject to customers’ consent – to their customers’ account information, thus paving the way for new market entrants and services, such as financial data aggregators, which enables customers to holistically manage their finances. However, the implementation of Open Banking is not without its challenges. Institutions need to create access to the relevant customer data which is not always held in one system, ensure such access is correctly segregated, as account information service providers (AISPs) and PISPs require different access rights, as well as ensure ongoing resilience, accessibility and security of their system infrastructure, just to name a few.
Oct-Dec 2019 Issue