With the Strong Customer Authentication (SCA) compliance deadline less than four months away, banks are still underprepared.
While banks continue to open their application programming interfaces (APIs) to third-party providers and FinTech firms, many are still in the dark when it comes to SCA. Merchant partners are also scrambling, with just 40 percent of merchants within the EU currently stating they will be ready by September 2019.
Meanwhile, banks across the EU are confronting other changes to banking and data, including the ways they tackle fraud. In the latest PSD2 Tracker™, PYMNTS examines how banks and financial providers are updating their fraud protections to keep out a rush of cybercriminals looking to take advantage of the newly connected financial ecosystem.
Around the PSD2 and GDPR Worlds
One way banks are working to comply with SCA is by turning to partnerships and collaborations. Sberbank Croatia is among the financial institutions (FIs) partnering with other platforms for more flexible compliance solutions. The bank recently announced a partnership with banking solutions provider Token.io, which will enable Sberbank to develop new products and services while staying compliant with shifting regulatory laws.
Other banks are also starting to play a role in the broader financial ecosystem under PSD2. French bank BNP Paribas has opened a suite of PSD2 APIs for testing, with developers now able to create new solutions and features using the API portal.
Meanwhile, many companies are still struggling with the changes to data and customer relationships brought about by GDPR. Technology company Google, for example, is facing a probe by the Data Protection Commissioner (DCP) in Ireland. The probe follows complaints that Google’s advertising technology (AdTech) systems are not compliant with GDPR.
For more GDPR and PSD2 news, visit the Tracker’s News & Trends section.
Banks are in Danger of Losing the ‘Customer Service Layer’ Under PSD2
Banks are being forced to share the spotlight with a rising number of FinTech firms as Open Banking expands. These tech-savvy startups and third parties now have access to previously siloed financial data, allowing them to develop products and services that may catch customers’ eyes ahead of those offered by more traditional banks. In fact, the openness of Open Banking is causing banks to call their business models into question, said Markos Zachariadis, associate professor in information systems and management for Warwick Business School.
To learn more about how Open Banking is changing traditional banks’ approach to customer service, visit the Tracker’s feature story.
How PSD2 is Affecting Asia’s Open Banking Regulations
PSD2’s impact in Europe has not gone unnoticed by regulators in other areas of the world. In Asia, regulatory bodies in Hong Kong and Singapore are using the PSD2 regulation as a blueprint for their own innovations when it comes to data transparency and movement. These countries are innovating their online banking systems, developing new ways to treat data and online money movement with a new regulatory framework.
To learn more about how these countries are developing new data rules inspired by PSD2, visit the Tracker’s Deep Dive.