Frode Lervik, PA’s financial services expert is quoted in an article in May’s edition of Financier Worldwide Magazine which assess the challenges and opportunities facing the payments industry in light of the forthcoming Payment Services Directive (PSD2).
The article notes that PSD2 is a game changer for the industry and that financial institutions must evolve in order to survive.
It goes on to examine the legislative origins of the directive. Frode explains that: “PSD2 goes further in legalising and opening up the market for new players to challenge incumbent banks, stimulate innovation, competition and create an integrated and efficient market.”
He goes on to add that: “The directive is driving strategic thinking in the banking industry, both within individual banks on how to remain competitive and at an industry level on how payments infrastructure should be developed.”
Frode also notes that PSD2 will offer substantial opportunities for new players looking to enter the market. He says: “Alongside numerous FinTech companies, global giants such as Apple, Google and Samsumg are looking for opportunities, and Facebook, with its massive user base, is along likely to be a strong challenger in the payment services space.”
The challenges for providers are not to be overlooked however. Frode notes that: “Getting regulation right is a challenging task as regulators need to balance a lot of conflicting concerns. If it is too specific, it may hamper future innovation. On the other hand, incumbent banks may seek to take advantage of any lack of clarity to make life more difficult for their competitors. It is unlikely that it will be possible to solve all issues before implementation, partly because the issues will only emerge when the competitive dynamics kick in. We should expect regulators to be alert after the implementation date. Banks are well advised to try and comply with the directive within the specified timeline because the regulators are likely to be prepared to forcefully ensure compliance.”
Frode concludes by sharing his insights on compliance strategies, noting that: “While the countdown to PSD2 continues and much uncertainty still exists, banks still have a lot to do just to become compliant.
“As always when a new regulation is introduced, you do not get the full picture as early as you would wish. We noticed a real shift in the market in the second half of 2016. PSD2 moved up the corporate ladder to become a key priority for chief executives and their management teams. Formulating a strategic action plan and making sure there is a programme of activities in place that delivers the strategy, in addition to taking care of the pure compliance aspects of PSD2, is clearly the way to go.”