June 28, 2023 – The European Commission has released the final draft of the financial data access and payments service regulation proposal. This package of proposals will expand upon and update the existing Payments Services Directive v2 (PSD2) which governs open banking services.
How will it impact open banking? Let's take a look!
When PSD2 was implemented, it provided much needed stability, which enabled the industry to make serious headway and gain significant market traction in the EU, UK and the Nordics.
What PSD2 has done so far:
Eight years on from its introduction, there is wide agreement in the industry that much can still be done from a regulatory perspective to help open banking to reach its full potential, as well as to update the regulations to keep pace with changes in market and to meet evolving consumer needs and expectations.
The new package of proposals, including version PSD3 and the new Payment Service Regulations (PSR1) will build upon the existing framework to improve and extend open banking services to promote competition, level the playing field, and further innovation. In addition, The Commission has put forth a new framework for responsible financial data access (FIDA) to enable “open finance”, the next generation of open banking services, which will make it possible for businesses and consumers to access personalized financial services tailored to meet their needs.
The new measures can be summarised as follows:
Without a doubt, this new set of proposals will help bring data-enabled payments to the market. It will create more harmonisation across markets and mandate access to critical banking infrastructure that will enable even use cases to benefit from open banking. Already, under PSD2, open banking has made significant improvements to payments by reducing fraud making it one of the safest payment methods on the market for both consumers and merchants.
With the introduction of FIDA, how data is accessed and used will be clearer and more regulated in a more consistent way which should bolster consumer confidence and the creation of next-gen financial services that support more personalised offers and greater financial inclusion. For a quick overview of the PSD3 and FIDA objectives, check out The next-gen of PSD2 regulations is here.
The next few years promise to be exciting for sure! 🚀