PSD2: More a “future of banking” than a payment directive (part1: vision)

Nov 29, 2016

The European Commission sees the European payments market as a key enabler of trade, commerce and financial services activities. No wonder then that so much regulatory emphasis has been placed on efficiency and opening of payment services.

PSD2 more a future of banking than a payment directive - part1

Back in 2009, a first significant change was introduced with the recognition of e-money and the status of Payment Service Providers. Today, with the revised Payment Service Directive (PDS2) the EU is looking to drive innovation and competition by opening the payment value chains while creating new pan-European payment roles.
This evolution is not a simple update of a regulatory framework. PSD2 will profoundly transform the industry landscape, similar to what happened with the unbundling of the utilities and the telco sectors in the 90’s and 00’s.
In this three-part series, we argue that the PSD2 calls for a deep strategic revision by market participants. Our analysis quantifies the impacts of PSD2 on daily banking revenues. We expect revenues to decrease by as much as 20% for certain institutions over the next five years, especially for the smaller banks that apply a purely defensive strategy.
Proactive and potentially transformative strategies can offset these risks and, more importantly, generate substantial opportunities. We discuss the various options and their impacts, and provide a comprehensive framework to guide you through the process of designing and implementing the optimal approach.
We expect new players to take advantage of the new opportunities that PSD2 offers as soon as it comes into effect, that is, at the start of 2018. For all participants, the time to act is now.