Open Banking & PSD2

What is PSD2 ?

Fig: Gardens by the bay :Unsplash

Is PSD2 only a Europe-Union thing?

  1. A new approach to the UX of finance: Rise of Neo Bank like Brex, Monzo, Revolut made a clear indication that exiting bank infrastructure lacks in User Experience. Seamless UX by these companies has gained lots of traction from customers. Few banks in Singapore have done an amazing job in UX compare to other banks too. All these are well poised to grow in the PSD2 environment.
  2. Rise of Open Finance: I did customer surveys across South East Asia and India with more than 100+ people (mostly business owners) and found they believe more in openness and transparency in the finance. Although they are not open to make public about all of their finances. On the other hand, they believe, openness creates trust and processes things faster too. PSD2 solves this issue. It explicitly empowers account holders with the authority to share data.
  3. Standardization of accessing data: Different companies have different formats of balance sheets. This is another barrier to open finance. Making all balance sheets in common format and then exposing it via well-defined API is difficult. Few companies are trying to build a sandbox kind of environment where data will be processed in standard format for PSD2 for participating banks.
  4. Save money and time: There are many things that can be automated and will save lots of time for companies as well as users’ authors-action process. eg: Banks can form a consortium of the KYC process. Once any customer got verified on one bank portal, he/she isn’t supposed to go through the same process for another bank. This will not only save lots of time for banks and users, but it can also be integrated easily with insurance, healthcare, and other verticals. I am sure there might be few companies/banks working on this. This whole new approach gives an instant push to this authorization process of open banking.
  5. It’s all about a better experience. PSD2 doesn’t limit to save time, money and giving fancy dashboard. It is poised to give the ultimate whole user journey from start to end. It protects consumers as well as promotes innovation around online and mobile payments. Think of buying mutual funds/shares from one vendor. If you are not satisfied with one vendor, you can change your vendor in just one click. No need to worry about settlement and rework for the KYC procedure.
fig: PSD2 usage in some industries.

Ankit Raj

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Blockchain Engineer | Distributed system | Ex- Red Hat | Ethereum foundation grantee

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Ankit Raj

Ankit Raj

Blockchain Engineer | Distributed system | Ex- Red Hat | Ethereum foundation grantee

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