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Posted by Fintech Finance on January 12, 2018:
The Second Payment Services Directive (PSD2) is due to come into effect on Saturday 13th January, with the Europe-wide legislation set to change the way that banks operate. Consumers will be able to instruct their banks to share data securely with third parties, making it easier to transfer funds, compare products and manage their accounts.
However, according to the Competition and Markets Authority several of the UK's major banks have been granted more time, after indicating that they would fail to miss the PSD2 deadline. Barclays, Royal Bank of Scotland, HSBC, Santander and Bank of Ireland informed the Competition and Markets Authority that they could not release all the data needed on their customers in the timeframe required by the new law. This indicates the ongoing technology challenge faced by banks.
Ben Boswell, VP Europe for World Wide Technology comments: "January 13th is meant to see the start of disruption for the banking industry. However this kind of technology change can be very complex for banks. It involves dealing with very high-stakes application assurance, meaning the confidence to know that their systems are running, available and secure at all times.
"Banks are essentially service providers, because of the high level of technology infrastructure they provide around the globe. Therefore the level of technology assurances they need are extremely high."
PSD2 will require banks to facilitate third party access to their customers account via an open Application Programming Interface (API). The software intermediary acts as a standardized platform that is a gateway to the data, making it essential that banks, financial institutions, and fintechs have the technology in place.
Ben continues: "All legacy applications need to be refactored to fit with the agile API infrastructure. Many banks currently use private APIs to improve information flow internally between legacy systems, so they already have experience of this kind of programming. But the technology and security implications of open APIs are far greater and require a high level of assurance."