What Does Open Banking Mean For You?

PSD2 – The Second Payments Service Directive

Open Banking is here, in what has been described as ‘one of the greatest shake-ups in personal finance in years.’

The implementation of the revised Payments Service Directive (PSD2), on 13th January, is considered D-Day for payments but in reality, it is the beginning of an evolution across financial services for the benefit of the consumer.

The new rules aim to promote the development and use of innovative online and mobile payments. This will allow consumers to take control of their own data and share personal financial information with companies other than their bank in order to improve the customer experience, either when making a payment in-store on a mobile device, or simply searching for options for broader financial services.

This has led to further opportunities for Fintechs to collaborate with traditional financial institutions to create customer centric solutions as online and mobile payments continue to grow.

Who’s In Control of the Data?

Financial data such as spending habits and overdrafts limits are currently held by banks. Under the new rules, the ownership of this data is transferred to the consumer, meaning third-party providers (TPPs) can introduce comparison systems, showing alternative deals.

One of the main concerns for consumers is that sharing your transaction data with TPPs, whether looking for financial services or making a payment could mean that your data could be accessed by anyone. This is not the case. PSD2 introduces stricter rules for electronic payments with strong customer authentication requirements based on two or more security features (something you have, something you own, something you are) in order to fully protect the consumer.


As with all developments in payments over the years, improved security is at the heart of the new regulations. David Poole, Global Head of mPOS Solutions explains:

With the implementation of PSD2, Payment Service Providers will be required to provide “strong customer authentication”, defined as multi-factor authentication (with two or more independent factors). This will test all types of authentication solutions, leaving consumers to decide which they prefer and what works best, in terms of security. Most successful solutions will be those which strike the perfect balance between resilient security and usability convenience.”

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