National Competent Authorities (NCAs) – the national bodies responsible for overseeing PSD2 in EU member states should be flexible around the implementation deadline for PSD2 in a bid to avoid an Open Banking ‘cliff-edge’ scenario after the final deadline on 14 September.
In an open letter published on its website, Tink research revealed that with less than one month before the technology environment underpinning one part of PSD2 is scheduled to be ready for use, not a single financial institution in Europe has so far met the regulatory requirements to be compliant.
This could have serious repercussions for the third party providers (TPPs) that create technology-based financial apps and products, all of whom rely on stable connections to continue offering the services that people in Europe have become accustomed to.
On 14 June, three months before the deadline, all banks were required to publish their access interfaces, or Application Programming Interfaces (APIs), which would allow TPPs to access their customers’ financial data to create new financial products. According to Tink’s previous data, however, only two thirds of banks did so, which gave third party providers less time to integrate the new APIs.
New analysis now shows that over a third (36%) of the published APIs are not functional, presenting significant obstacles for TPPs trying to integrate with them. Additionally, a quarter (26%) were still completely unavailable. Only 15% met the requirements set out in the Regulatory Technical Standards, but their quality, performance or user experience still fell short of meeting the requirements to be compliant.
“PSD2 represents the biggest change in retail banking in Europe in living memory. Technological innovation – backed up by strong regulation – means we have a chance to open up the industry in a way we have never before seen,” says Tomas Prochazka, VP of Product, Tink.
“Third party players in the financial industry are eager to create new and exciting products that allow people to take control of their finances. But these third parties need continued access to financial data that banks hold in order to continue their services. If regulators allow a poor technology environment to prevail, this access will be compromised and millions of banking customers will suffer as a result.”
What is the industry calling for?
National Competent Authorities (NCAs) to take two actions as soon as possible:
- Guarantee flexibility around the PSD2 implementation deadline. This includes refusing to grant fallback exemptions to banks whose APIs do not yet meet the required standards.
- Foster stronger industry collaboration to solve the problem. This means working closely with TPPs and financial institutions to address the current issues with PSD2 APIs, while ensuring that existing services offered by TPPs are not disrupted in the meantime.
“Showing greater flexibility around the implementation deadline is in everyone’s interest. Rather than rushing into a poor technological environment, we should recognise the state in which we are and give banks the time they need to get up to speed. Thankfully we are already seeing authorities the UK, France and Germany showing promising signs of this,” continues Prochazka.
“Our experience tells us that banks are on board with the open banking journey. We must all now work together to make sure they can deliver so that open banking does not falter.”
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