On January 13 the Revised Payment Services Directive, PSD2, came into force across the EU. Worldline’s CEO Gilles Grapinet speaks in a new interview about the huge opportunities for banks, large retailers, and FinTechs with PSD2, and especially points out that the banks need to realise that only complying with the PSD2 can lead to missing out on 90% of the potential offered by the new directive.
The PSD2 puts many new requirements on banks, including the obligation of opening up – through APIs – their clients’ payment accounts to third parties (TPPs), and increasing the use of Strong Customer Authentication (CSA).
Compliance is mandatory for all European banks, but Gilles Grapinet emphasises that the PSD2’s reach goes far beyond compliance: “The PSD2 is a game-changing regulation. It is not just another set of rules in the world of banking. It is a way to unleash the value of data – in this case of course banking and payment data – and it has the potential to create a new type of economic model for banks as well as for several other parties. The PSD2 brings the platform economy to banking, and nobody should understate what that means.”
For banks, 90% of the opportunity lies beyond compliance
Grapinet continues to explain that by now at least the larger banks in Europe understand that the PSD2 should be considered a strategic opportunity. 90% of the PSD2 potential for the banks lies beyond compliance.
“Banks are by design compliant organisations, so they will of course cope and meet the compliance requirements. What is beyond the 10% for the banks is the opportunity to become Third Party Providers themselves, and to extend their ecosystem of partnerships with many different types of companies. We immediately think of FinTechs, of course, but it may as well be merchant organisations, governments, or other banks.”
“For the banks, the PSD2 is a goldmine of opportunities to bring value to their customers, and the PSD2 will accelerate the banks’ development and encourage them to take the next natural step and start exploring the new landscape of Open Banking. So, when you look at all this potential in total you have the 90%, which is not about compliance, but about business – and when you look at the PSD2, you must think business.”
Opportunities for the FinTechs
Mr Grapinet points out that the FinTechs stand to gain a substantial upside from the PSD2. He sees two main groups of FinTechs. “Some of them have been engaged for years as TPPs. For companies like Sofort, Linxo, and Trustly, the challenge is to reach a significant market size very quickly because now, with the PSD2, the competition will be cross-European and since most of these are local players they need to expand their footprint. […]
Then we have the new entrants. Hundreds of millions of euros have been invested in venture capital to support new value propositions, and we can expect to see an explosion of offers, and only the market will tell who will bring real value to customers in the end.”
The B2Cs to gain the most
Despite the many opportunities for both the banks and the FinTechs offered by the PSD2, Grapinet points out a third group – the large B2C organisations – as the one group to potentially gain most from the new directive; although this group often tends to be overlooked in the PSD2 debate.
“The best positioned to take advantage of the PSD2 is not the FinTechs. It is organisations that already today have a high level of customer relationship with millions of customers. I am thinking of the large retailers and the large telcos, and probably also some important public services that will become TPPs and expand their value proposition.
And we know for sure that the big B2C brands are to take advantage of the PSD2 and to set up TPP services either directly or through partners like Worldline.”
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