1. Open Banking & PSD2 How regulation is shaping the future of banking
xCEEd
Belgrade
Gary Munro
18th May 2017
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Agenda
Drivers for Open Banking
Regulation
Open Banking through PSD2
Strong Customer Authentication
Threats & Opportunities
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3. Drivers for Open Banking
Regulatory Drivers
National & EU
More competition
Diversity of supply
Inclusion of underbanked
Customer expectations
Data
Desire for an alternative to card schemes
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4. Drivers for Open Banking
PSD2
Mandates Open Banking
ASPSP – Account Servicing PSP
XS2A – must provide access to accounts
TPP – Third Party PSP
PISP – Payment Initiation Services Provider
AISP – Account Information Services Provider
CAF – Confirmation on Availability of Funds
GDPR
Conflicts with PSD2 in places, impact on data services must be adhered to
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PSD2 to Open Banking
Dutch Payments Association 4 tier model
Level 1 – PSD2
States the “What”
Level 2 – RTS
EBA – On SCA & CSC
Strong Customer Authentication
Common & Secure Communications
Level 3 – Multi-stakeholder groups
Level 4 – Market Solutions - APIs
APIs
Working Groups
RTS
PSD2
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Open Banking APIs
ASPSPs
API 1
API 2
API 3
…………………………
API x
AISP / PISP
Customer
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7. Open Banking APIs – Clusters?UK
API
Dutch
API
Berlin Group
API
No Common European API
AISP / PISP
Customer
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8. SCA – key to Open Banking
PSP must authenticate the account holder based on 2FA:
Knowledge
Possession
Inherence
ASPSP Identify PSPs via qualified certificates
eIDAS
Explicit consent from account holder for service
ASPSP
SCA
AISP / PISP
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9. Reference Fraud Rate (%)
Exemptions to SCA?
RTS defines a number of exceptions on need for SCA:
Contactless <= €50 (€150 cum)
UAT – parking / tolls
Payments <= €30 (€100 cum)
Transaction Risk Assessment
Transaction Risk Assessment:
Only if Reference Fraud Rates met
Reference Fraud Rate (%)
Transaction Value
Remote Card based
Credit Transfers
€500
0.01
0.005
€250
0.06
€100
0.13
0.015
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PSD2 - GDPR
PSD2 provides Open Banking through provision of data services GDPR protects individuals data
Salary
Utility Bill
Bob
Account Fee
Mortgage
Alice
Credit Card
Supermarket
ASPSP
SCA
AISP
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PSD2 - GDPR
Only access data from designated payment account and related transactions. Explicit consent required from user. Open Banking APIs need to protect data.
Salary
Utility Bill
Bob
Account Fee
Mortgage
Alice
Credit Card
Supermarket
ASPSP
SCA
AISP
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12. Open Banking opportunities
Threats:
Competition from Tech titans
Competition from Challenger banks / fintechs
Opportunities:
Consider strategy
Operating model – Customer centric not account centric
Financial model
Become PISP / AISP
Federated Identity providers
Partner with Fintech
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Questions are welcome
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14. About Consult Hyperion
Consult Hyperion specialises in working out the opportunities and threats which result from the harmony and collision of security, networks and transactions.
We are constantly assessing these factors, as they change continuously, and delivering ideas, solutions and products to our clients.
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Who do we do it for?
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Contact
Browse
Mail
Comment
Listen
Consult Hyperion UK
Tweed House, 12 The Mount Guildford, Surrey, GU2 4HN, UK.
Consult Hyperion USA
535 Madison Avenue, 19th Floor
New York, NY 10022, USA.
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