Open Banking, Open Finance & Payments: what to expect in 2023
The world of Open Banking keeps on evolving with more and more players – and their innovative solutions – entering the market. Regulators are reviewing their positions with the goal to facilitate user journey and provide added value solutions, while keeping in mind the security and data protection aspects. Its natural evolution revolves around Open Finance, which is about to emerge and is defined as the sharing, access and reuse of personal and non-personal data for the purposes of providing a wide range of financial services.
A significant change in the RTS
One mandatory change in the PSD2 RTS (Regulatory Technical Standards) will smoothen the journey of each user of Account Information Services (AIS), is the switch from the 90-day Strong Customer Authentication (SCA) to 180 days. This evolution was advocated by the EBA and was very recently published in the Official Journal of the European Union: it will come into force by July 25, 2023.
This means that the overall customer journey will be improved, and that friction for those using account information services will be reduced. Less obstacles and less barriers mean an ever-growing usage of AIS-oriented services.
The normalization of Instant Payments
Instant Payments (IPs) are to become the new normal in Europe, as highlighted last year by Commissioner McGuinness, and will be pushed by the European Commission, in all member states to enable its wider adoption.
IPs will be affordable and accessible to everyone in Europe, serving the underbanked and improving financial inclusion, but it is also about providing easier and more efficient payment services.
Combined with A2A Payments, IPs represent a huge improvement as more people will be able to pay in various daily life situations online or offline – without the need for additional bank accounts or cards – and funds will be sent/received directly therefore drastically improving their personal finances visibility.
Reviewing PSD2
In the second quarter of the year and as expressed by the European Commission, a review of PSD2 will be published. It could notably focus on new payment services, as well as additional requirements in terms of customer protection and transparency.
In its “Opinion and Report” in response to the EC’s Call for Advice on the review of PSD2, the EBA shared several key points and challenges to should be addressed in this PSD2 review:
- Explore the possibility of having a common API standard across the EU to be developed by the industry,
- Require all ASPSPs to provide a dedicated interface for TPPs’ access,
- Clarify the scope of information to be shared with TPPs,
- Clarify the type of information to be shared from TPPs to ASPSPs.
The EBA also underlines the need to “move from ‘Open banking’ to ‘Open finance’ (or otherwise the expansion from access to payment accounts data towards access to other types of financial data) and the opportunities and potential challenges associated with it, based on the PSD2 experience”.
Contact us to learn more about PSD2 XS2A
An Open Finance Framework
Still in the second quarter of the year, the European Commission (EC) will publish the long-awaited Open Finance Framework. As described by the EC, this framework aims to enable data sharing and third-party access for a wide range of financial sectors and products, in line with data protection and consumer protection rules. It is based on the principle that financial services customers own and control the data they supply and the data created on their behalf.
The concept of Open Finance is much wider than Open Banking and payments account data. In this respect, Open Wealth is one of the topics that could be addressed: the opening of securities accounts through the use of APIs, notably, would enable the exchange of position and transaction data, including valuations for reconciliation purposes, on a near real-time basis.
A concrete example in Luxembourg: LUXHUB and Vermeg recently announced a partnership to facilitate the exchange of custodian data (through automation and standardized formats), which means less friction as well as reduced operational costs for life insurance companies.