PSD2 — the electroshock and aftermath

In the last years, PSD2 has been a violent electroshock for financial institutions. Banking institutions did not see it as a viable opportunity!

A large number of banking institutions still see PSD2 as a terrible threat to their purring business!

PSD2: Why is it perceived as a threat?

The fear of losing the customer relationship is the starting point. Opening up services to third-party applications, whether for payment or aggregation, involves an intermediary who, managing the relationship with the final customer, will be the only one with full knowledge.

However, this is quite the opposite of the spirit of the law. Indeed, it must be understood that even before the PSD2 was conceived, there were aggregators which, via screen scraping tools, played the role of an intermediary.

The only thing that this directive changes is that from now on, these third-party players are regulated in terms of security in the same way as financial institutions.

To a minor extent, this directive is seen as a potential risk, because the client is now not only linked to one sales advisor but can take advantage of multiple advisors, sometimes even robotized (RobotAdvisor).

Some have seen this as a risk, particularly concerning bank overdraft fees, which would necessarily be reduced if the client could get better advice.

Axway’s contribution to these projects…

Axway met its customers’ expectations by providing a simple, reliable, fast, and secure response to the regulator’s requirements.

In France, a large majority of PSD2 flows through our AMPLIFY™ API Management tools. Our customers are looking for secure products, meeting the highest security certifications (Common Criteria EAL4+). Our AMPLIFY™ platform is the best solution to meet PSD2 requirements.

PSD2 the first step

From our point of view, PSD2 is just the first step. It has enabled financial institutions to understand that Open Banking, imposed by the regulator, is not a source of risk.

We now need to initiate a second stage in the project, which will lead the banks to embrace the business opportunity that these new distribution channels (APIs) can present.

Our Catalyst approach aims to help our banking customers make good decisions.

For the most advanced decision, they understand that APIs can be the digital answer to their quest for proximity. This proximity, traditionally achieved by opening bank branches close to where customers live or work, is translated in the digital world by a seamless integration in the moments of life. And for this integration to succeed, the new digital distribution channels that are  APIs must be wide open.

Examples

Let’s take the example of a shopping journey on the Internet. We could imagine that access to one’s customer account information would allow us to better advise the customer in his purchases, automatically avoiding offering him products that do not fit his budget. This is for individuals.

For professionals, we could completely integrate factoring services directly into management tools for craftsmen. In addition to the management of its stock, its customer base, its invoices, it would be possible to integrate also, in a transparent way, a vision of the balance of its accounts. The examples are endless.

Banks still need to understand the benefits of embracing this new distribution channel by offering a complete opening of their services in the form of an Open API.

Axway contributes to the construction of this “Bank as a service”

Once again, we have the most relevant software offering to meet the needs of our banking customers. Indeed, in Axway’s DNA, there is the creation of ecosystems.

In the case of banking, we have been the processors of bank clearing for 30 years. This trust in tools is essential to build on the solid foundations of “bank as a service.” But it is not enough.

We also need to ensure perfect security, as we saw earlier. Above all, we need to provide governance tools for these new distribution channels.

You don’t manage an open information system the way you managed a closed system in the 1990s. The simplicity of open systems made possible by APIs is an exceptional source of acceleration for partnerships, which create so many new forms of relationships and connections.

You have to be able to manage all these new business interactions with the right tools. To achieve this, we offer a unique asset on the market, which is particularly effective in managing this ecosystem, a real “control tower” of the open information system.

Our “Unified Catalog” enables complete and precise governance of interactions, offering a 360-degree view of partnerships and enabling specific policies to be managed for each of the APIs interconnecting external players with our Information System (IS).

Finally, it should be added that we offer all the modules to monetize these services either directly on the APIs, or via precise usage statistics.

What about the Bank as a Platform? Can Axway play a role in it?

As a preamble, it should be pointed out that the notion of “bank as a platform” is not very widespread, as it has such an in-depth impact on the traditional business of bankers.

It requires a perfect understanding of the mechanisms of the network economy, a review of its mission statements, and an adjustment of its strategy.

It is such a disruptive model that few bankers have embarked on this path which, for us, is a guarantee of future success. To be convinced of this, you only have to look at the fact that all the largest market capitalization has moved to the platform-company side in the last 10 years. Let’s mention Amazon, Google, Apple, Salesforce, Facebook, etc.

Positioning yourself as a BAAP means agreeing to no longer offer only your own services in the form of an API, but to take advantage of your security and broad customer base to offer, alongside your services, the services of other companies.

A service marketplace is then created, and indirect revenues are generated from commissions. Within the framework of the construction of such an ecosystem, we can accompany our customers in their missions, their vision, their strategy.

That’s what the Accelerate Workshop Catalyst approach is all about. We support our customers from the first thoughts to the production launch, and we offer them all the capabilities of our products, including HIP (hybrid integration platform), to deliver these projects in a very short period.

Axway is the only solution provider to offer this opportunity to capitalize on its legacy, which is sometimes 30 years old, to project itself into a business vision of the 2020s! This is our mission.