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PSD2: Making it actionableWebinar Wednesday July 27th, 2016
Overview
What is PSD2
2
What is PSD2?
PSD2 is short for ‘Second Payments Services Directive’, a new European regulation that says banks have to allow a secureway for customers to authorize a third party provider to have direct access to:
§Account and transactional data§Make and authorize payments
What is PSD2?
3
What is PSD2?
PSD2 will impact how we access our finances
4
Labor intensive task of getting complete overview of financial status across banks.
Before PSD2
What is PSD2?
PSD2 will impact how we access our finances
5
‘Account Information Service Providers’ (AISPs) can offer direct insight in all products and transactions across banks.
After PSD2 adoption
What is PSD2?
PSD2 will impact the flow of payments
6
Consumer
Issuing bank Card Scheme Acquirer
Merchant
Before PSD2
What is PSD2?
PSD2 will impact the flow of payments
7
Consumer
Issuing bank
Merchant
After PSD2 adoption
Parties can act as ‘Payment Initiation Service Provider’ (PISP) or work with a PISP to simply the flow of transactions and payments.
Overview
Impact of PSD2 on banks
“.”8
Impact of PSD2 on banks
PSD2 Timeline: Aiming for Q4 2018
9
December 2015EBA released discussion paper on authentication and secure communication
June – Sept 2016 (est.)Consultation period on draft RTS*.
January 2016PSD2 is published in the official journal of the European Union
January 2017Deadline for EBA to submit RTS on authentication
April 2017 (estimate)EBA RTS adopted bycommission
October 2018Deadline for EBA RTS Compliance for ASPS, PSPs and Authorities
January 2018Deadline for member states ofthe EU to transpose PSD2 aslaw across 28 member states.
2015 2016 2017 2018
Banks have 18 months to comply to RTS
* RTS = RegulatoryTechnical Standards.
Impact of PSD2 on banks
1. EU sets regulation and defines technical standard 2. EU member states to turn this into national laws3. Banks to comply before October 2018 (estimate)
1. Third party authentication2. Third party access to Payments (transaction requests)3. Third party access to Account information (balances and
transaction history)4. Fees Transparency5. Fine grained entitlements
So, what needs to happen?
10
Impact of PSD2 on banks
PSD2 will change to competitive landscape
11
Impact of PSD2 on banks
Strategy: Proactive vs Reactive
12
§ There is a choice: do you implement the minimum requirements to fulfil PSD2 (reactive) OR do you embrace the change and modify your business model (proactive)?
§ PSD2 is significant market disrupter and early adopters will shape the market
Proactive / Disruptor Bank§ First top adopt open APIs§ First to welcome 3rd party
developers / ecosystem§ Accept commoditization and find
new differentiators
Reactive / Disrupted Bank§ Meet the essential criteria§ Rest is business as usual§ Have defensive and delay
strategy to 3rd party's
Impact of PSD2 on banks
Proactive banks: move to public API’s
13
API
Overview
Banking API Economy
14
Banking API Economy
Back Office Functions
PRODUCTS& IT SYSTEMS
Future = Two Speed Architecture
Existing Systems(Silos)
Customer Experience
Agility
Flexible Customer Journeys
API
Banking API Economy
Future = Two Speed Architecture
16
Backend
Digital Customer Experience Platform
SOA / Middleware layer
System of Record
Year
sM
onth
s
EmployeeApplications
Partner Apps
CustomerApps
"Internet of Things"
Days
Database
API EXPOSURE
API CONSUMPTION
Banking API Economy
Opportunity: Build Connected Experiences
Next GenerationConsumer Experiences
PFM, card linked offers
Work with FinTech VendorsP2P lending, Wallets, New
Apps, IoT, etc.
Access control, and risk management
Reduce risk through access control, metering
of enterprise assets
Outside-in BankingCross Banking Aggregation, Multiple contextual financial
apps Alternative models inWealth management
Robo-advisors for affluent segments
Deposits LoansInvestments PaymentsThird-party
services Other Banks 17
API
Customer Controlled
Account Aggregation&
Customer Data Hub
Banking API Economy
Opportunity: Complete Customer View
18
Banks FinTech Apps
data
data
data
data
data
data
Banking API Economy
Opportunity: Integrate FinTech Capabilities
19
API LayerConnecting to 3rd parties,
Selecting the best offer / service
Omni-ChannelDigital Banking
Platform
Core Banking
Banking API Economy
What is the Business Model / ROI?
20
Revenue-sharing models (API provider pays developer)
Fee-based models (API provider charges developer)
Freemium models
Fixed
Flexible
Hybrid(flat fee plus fixed or flexible)
Transaction
One-time
Subscription
Duration
Quantity
Hybrid
Transaction Volume
Custom Attribute
Advance / Arrears
Pro-rated / Full amount
Overview
PSD2 Roadmap
21
PSD2 Roadmap
PSD2 Timeline: Aiming for Q4 2018
22
December 2015EBA released discussion paper on authentication and secure communication
June – Sept 2016 (est.)Consultation period on draft RTS*.
January 2016PSD2 is published in the official journal of the European Union
January 2017Deadline for EBA to submit RTS on authentication
April 2017 (estimate)EBA RTS adopted bycommission
October 2018Deadline for EBA RTS Compliance for ASPS, PSPs and Authorities
January 2018Deadline for member states ofthe EU to transpose PSD2 aslaw across 28 member states.
2015 2016 2017 2018
Banks have 18 months to comply to RTS
* RTS = RegulatoryTechnical Standards.
PSD2 Roadmap
Build or Buy a solution that enables:
§ Third party Authentication (oAuth + 2FA)§ Entitlements - Flexible and fined grained access control§ API versioning and management§ Fraud and penetration monitoring§ Developer tools (SDKs, sandboxes, documentation)
§ Align on -- or select, an clearly defined API standard
PSD2 Ready – Shopping List
23
PSD2 Roadmap
1. You don’t have to wait for the regulations to be final. It is going to happen, and technology selection and implementation can already start today.
2. You don’t have to limit the scope to PSD2. Be open and creative in what APIs and services to enable for 3rd party developers and partners to find new business models and mutual benefits.
3. Experiment. Get in a ‘lean startup’ approach to this, with smart technology to see what works and sticks. Be open.
PSD2 Roadmap
24
Overview
The Backbase Vision
25
The Backbase Vision
Mission: We empower Financials to accelerate their Digital Transformation
26
The Backbase Vision
Raising the Bar – Superior Experience
27
Empowering the Self-Directed Customer
BACKBASE: Omni-Channel Banking
ExistingSystems
PSD2 enabled banks
Customer Experience & Digital Banking Services
OLB Mobile
Seamless Omni-Channel JourneysRetail BankingBusiness BankingWealth Management
The Backbase Vision
Digital Banking API Layer – INTEGRATE & EXPOSE
FinTech Providers
Open APIs
The Backbase Vision
BACKBASE: Build Connected Experiences
Open API Layer
Omni-ChannelDigital Banking
Experience
Core Banking
PSD2 Enabled Banks
The Backbase Vision
BACKBASE: Business Model Agility
Scenario 1Digital CX
DigitalBanking Core Systems
Scenario 3Aggregator
BankingServices
Aggregator
PSD2 enabled banks
Fintech Providers
Fintech Providers
Scenario 4Omni-Channel
Omni-ChannelBankingPlatform
PSD2 enabled banks
Fintech Providers
Fintech Providers
Core Systems
Scenario 2New Digital
Built-for-Digital Banking Platform LeanCore
Customer Experience Solutions. Delivered. The Backbase Vision
31
Forrester Market Wave for Omni-Channel Banking SolutionsJost Hopperman
“Backbase leads the Pack”
ü Broad business capabilities, ü Rich customer experience, ü Very solid technology ü Very solid architecture
Recognized as Innovation Leader
Q&A
32
Thank you!Jouk Pleiter, CEO & Co-Founder, [email protected]
Jelmer de Jong, VP Product Management, [email protected]