A RADICAL shake-up will mean banks will no longer have a monopoly on customer account information.
The overhaul of banking comes on foot of a European Union directive and takes effect from tomorrow.
Banks will have to facilitate other firms that have been given permission by a customer to access account information.
The Second Payment Services Directive (PSD2) seeks to open up banking and generate new ways to pay.
PwC Ireland Financial Services partner Sinead Ovenden said: “The new regulation will completely overhaul banking as we know it.”
The introduction of PSD2 is meant to create a level playing field for new entrants and traditional market players, offering more opportunities for competition and innovative payment services.
Under the revised directive, banks in Europe will need to make customer data available in a secure manner, and eventually give third-parties access to their customers’ accounts, Ms Ovenden said.
The new system would allow a retailer to check if a customer has sufficient funds in their bank account to pay for something, if permission is given, and to process a payment, she said. PSD2 is a testament to the new unfolding world of open banking where fintech companies, merchants and even telcos and other utility providers, can change the payments landscape completely, she said.
The new process will allow fintech companies to assess consumers’ finances, and use this to offer financial advice.
The directive’s purpose is to increase pan-European competition and participation in the payments industry also from non-banks, Ms Ovenden said.
It also aims to provide for a level playing field by harmonising consumer protection and the rights and obligations for payment providers and users.
PwC Ireland said all Irish banks surveyed aspire towards full open banking offering third parties to build up new services using individual bank data.
Banks will need to develop an open platform that allows partners to integrate their products and services into the bank’s offering, while generating new products and services.
The main elements of PSD2:
• With a customer’s permission, a bank must allow an outside company authorised by regulators to take a payment directly from an account for goods and services.
• A bank must allow an outside firm to access transactions history from a customer’s account for the purposes of aggregating information from several current and savings accounts into a single “dashboard”.
• Tougher customer authentication of online payments will be introduced from the second half of 2019.
• Banks will have to spell out reasons for refusing an application for a new account, making it harder to hide behind generic concerns like money laundering.
• Banks are required to give refunds for unauthorised transactions.
• Outside payment firms must respond to complaints within 15 days.
• Firms authorised under PSD2 are not allowed to take deposits or grant loans like traditional banks.
• Most PSD2 firms that take data from a bank account will also come under a separate EU General Data Protection Regulation that comes into force in May to reinforce safeguards on personal data.
Article Source: http://tinyurl.com/kbwqb42
- Economy shrugs off Brexit threat to grow at fastest rate in EU
- Ireland’s biggest mobile operator warns customers of possible data disruption over four days
- Monday 12 March 2018 Ulster Bank kicks off new mortgage war with string of cuts to fixed rates
- Irish SMEs aren’t investing enough, warns ESRI study
- Only 11pc of SMEs using renewables
- 21 Belvedere Place, Dublin 1
- +353 1 855 4188
- +353 1 836 6550
- 16 Mar 2018Economy shrugs off Brexit threat to grow at fastest rate in EU
- 16 Mar 2018Ireland’s biggest mobile operator warns customers of possible data disruption over four days
- 12 Mar 2018Monday 12 March 2018 Ulster Bank kicks off new mortgage war with string of cuts to fixed rates
- 12 Mar 2018Irish SMEs aren’t investing enough, warns ESRI study
- 12 Mar 2018Only 11pc of SMEs using renewables