In a commentary article for International Banker, Sindhu Vadakath, Senior Product Manager, Global Payment Services and Asia Payments, Treasury Services, BNY Mellon, takes a look at the introduction of the Second Payment Services Directive (PSD2) and the impact it will have on the core of traditional banking.
PSD2 requires banks to share their closely guarded customer data, opening the gates for the first time to third-party payment providers (TPPs), thus disrupting banks’ long-held monopoly on the payments sector. With an aim to improve transparency, customer rights and service, as well as the costs linked to the end-to-end payments process, the legislation allows TPPs to harness customer data to create cutting-edge products that can viably compete with bank offerings.
But this data-sharing, of course, is not without its risks – especially as TPPs cannot claim the same historical reputation for security and familiarity as their bank counterparts. As such, collaboration between these industry players is key to ensure a smooth roll-out of an efficient and secure payments service for customers in the new era of open banking.
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