Traditional banks warm to PSD2

Author: Jimmie Franklin | Published: 7 May 2019

Traditional banks are gradually warming to the EU’s second Payment Services Directive (PSD2) in spite of the potential threat it poses to their market domination.

PSD2 requires banks to share customer data with third parties – typically newer, more agile fintech companies – who are now able to compete on the same stage as traditional banks in a way not previously possible.

Implementation delays have hindered progress. According to Hogan Lovells counsel James Black, the legislation exposes the fact that "many established banks use legacy systems in comparison to digital-first challengers, who can make infrastructure and systems changes more rapidly".

In his view, this made it more difficult for established banks to innovate as they acclimatise to the the new landscape. "Many banks have no option but to take the view of compliance first and innovation second," he said. "Innovation is both...