Open access as an element in the collaborative spectrum for innovation

PSD2 stipulates in articles 66 and 67 that Account Servicing Payment Service Providers (ASPSP) need to ensure that their customers are able to use the services of a new group of third-party payment service providers. These providers are either payment initiation service providers (PISPs), which initiate a payment of the customers or Account Information Service Providers (AISPs), which collect customer account information to the benefit of their users.

The regulatory requirements for this open access are quite new to the banking industry, but we should note that in industries such as telecom the concept of allowing access is already being implemented.

Generally speaking we can observe that the PSD2 accelerates the move towards open banking and a ‘platformification’ of banks. The net result is that banks no longer fully dictate the interface and product proposition towards their customers: PISPs and AISPs may all step in to offer service solutions which may provide added value to the customer.

Open access as a part of the cooperative spectrum

In order to assess future market developments, we should view open access as a part of the whole spectrum of cooperation possibilities that exist with regulated financial institutions (Figure 2). On the left side I have specified three service levels that could come with an open banking / API regime:

• a basic service level that consists of providing access under the minimum requirements of PSD2 and the applicable regulatory standards,

• a medium access service level in which banks provide standardised value added services when cooperating with other partners in the market,

• a high service level consisting of bespoke arrangements and services, agreed to suit a particular solution.

The distinction in three ‘open access service packages’ allows a forward-looking investigation of the future of open access banking. At the one end of the spectrum we find the three open access service packages” (the basic access being mandatory) by ASPSPs and at the other end we find the regular cooperation between banks and business partners, which can come in all kind of forms (from white labelling to agency arrangements).

Of course, there is always the question whether the risk may occur that a fragmented technical landscape will arise that ultimately will be more of a barrier than a facilitator to open access. Personally, I am convinced that in today’s open technology landscape, there are little other economic alternatives for market players, but to cooperate on interoperability in this area. So, in time, a whole new range of API-and open banking services will become available to build these solutions. To accelerate the development of this integrated market for Payment Initiation Services, the European Retail Payments Board has set up a dedicated working group to define a common set of technical, operational and business requirements.

Relevant issues in the open access domain

As the PSD2 only provides a generic framework for this open access, there are still a lot of questions on the table with respect to the
access of the account. These are for example:

• what are the alternative business models based on the open interface?

• what are the legal issues to be arranged between PISPs, AIPS, PSPs and ASPSPs?

• what is the service level for basic access to the account?

• what could be the pricing mechanism for value added services?

Read the answers to these questions in our Open Banking & APIs Report 2017.