The financial industry is undergoing significant regulatory changes with the introduction of FIDA, GDPR, PSD2, and PSD3. These regulations aim to improve the security and accessibility of financial data for consumers and businesses.
Here’s a brief overview of these regulations and what they mean for banks – and why they also represent an opportunity for innovation and growth.
Understanding FIDA, GDPR, PSD2, and PSD3
The FIDA (Financial Data Access) directive proposes a new framework for accessing financial data. It will allow consumers and businesses to authorize third parties to access their financial data held by financial institutions. All financial products will be affected by this legislative proposal.
GDPR (General Data Protection Regulation) is a European regulation that aims to strengthen the protection of personal data of EU citizens. Banks must comply with this regulation by implementing appropriate security measures to protect their customers’ data.
PSD2 (Second Payment Services Directive) introduced open banking, allowing third-party payment service providers to access customer accounts and transaction data. Banks must provide secure access to this data and ensure the confidentiality and security of their customers’ personal information.
The PSD3 directive is the next evolution of payment services regulation. It aims to eliminate differences in the implementation of the directive and strengthen the correct application of the law. PSD3 should improve the playing field between EU countries for payment service providers.
What should banks do to be ready for FIDA, GDPR, PSD2, and PSD3?
To prepare for these changes, banks must implement robust security measures to protect their customers’ data, ensure compliance with current regulations, and implement new requirements introduced by these directives.
They must also ensure that their technological infrastructure is suitable for supporting these new regulations.
Opening up information systems via APIs offers several advantages for banks:
- Innovation and competitiveness: Opening up information systems enables banks to collaborate with fintechs and other players in the financial sector to develop innovative new products and services. This fosters competition and stimulates innovation in the sector.
- Improved customer experience: Access to financial data via APIs enables banks to provide a more personalized and transparent customer experience. Customers can share their data with third-party applications to benefit from financial services more tailored to their needs.
- Enhanced security : APIs enable banks to control access to financial data and establish strict security protocols to protect sensitive customer information.
- Regulatory compliance: Opening up information systems via APIs enables banks to comply with regulations such as PSD2 and PSD3, which require secure access to financial data.
In the following video, my colleague Laurent Van Huffel, Senior VP of Financial Services and Open Banking for North America at Axway, looks at some of the valuable use cases for open banking and how financial services providers can define success with it.
Opening up their information systems via APIs will require significant investment in technology and resources. Banks must ensure that they have adequate resources to support this transition and that they are prepared for any potential security risks associated with opening up their systems.
Engage with a trusted partner to open up securely
For 25 years, Axway has been the privileged partner of banks when it comes to opening up their information systems. Security is at the heart of our products (EAL4+) and every day, major banks trust us to transfer over 50 billion euros.
In conclusion, while these regulatory changes may pose challenges for banks, they also present opportunities for innovation and growth.
By embracing these changes, banks can improve their services, increase customer satisfaction, and stay ahead of the competition. And they need to use secure, open tools such as Amplify Marketplace.
Read more about how open banking is a goldmine of actionable intelligence for banks willing to open up.