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What was said: We have reached a tipping point

What does it mean:

  • The never-fully-realised warnings and prognostications about market disruptions, “paradigm shifts,” and new competition has desensitised many businesses and influencers in the market. Now that PSD2 is in force, as of January 2016, there is no longer an option to say, “Yes, we’ve heard it all before…. and nothing came of it.”  
  • Denial is not a valid business choice. All market player must now act; or be prepared to accept the consequences of inaction.


What was said: Customer adoption and customer acceptance of the new normal is a key factor
What does it mean:
  • In the new PSD2 ecosystem, the one key area outside the control of regulators, market players, innovators, commentators, and experts is the extent, speed, and willingness of customers to accept, use, adopt, and advocate new PSD2 products and services.  
  • The challenge will be to accelerate and incentivize customer adoption of any new products and services.


What was said: The clock is ticking on PSD2

What does it mean:

  • There is a limited time to act.
  • Even if the deadline of 13 January 2018 is delayed, any delay is only a delay of an inevitability.


What was said: It is easier for organisations to mobilise resources for compliance, regulation, and governance challenges than it is for innovation and competitive response

What does it mean:

  • Many organisations, especially banks, have entrenched views around existing business lines and revenue streams, which makes accepting change difficult.
  • Business planning cycles are typically 12-18 month windows, which are reliant on current revenue streams.  Innovation and new technology investment has longer term revenue/profit realisation cycles and, as a result, investment and organisational commitment is harder to obtain.
  • Governance and compliance culture results in investment priorities for new regulatory and legal requirements.


What was said: Of the PSD2 Technical Standards, the Strong Authentication and Secure Communication standard will be the most problematic/delayed.

There is no overall coordination for the development of the technical standards. Deadlines “will be pushed out”

What does it mean:

  • The EBA has been tasked with defining the full range of technical standards. However, its greatest challenge will be to define the Strong Authentication and Secure Communication standard.
  • With the consultation period recently closed, a further development period of 18 months will be required. Once developed, the EU Council and Parliament will need to approve the standard.
  • It is not possible to establish how long this development and approval process will take.
  • No one knows the extent of this delay or what can be done to mitigate it.


What was said: The Open Access technical standard has the highest impact for existing players

What does it mean:

  • Whilst the open access standard has the highest impact, it is definitive and less open to interpretation.


What was said: The key dichotomy exists in building customer security into the frictionless customer experience
What does it mean:
  • Creating balance in providing strong security with extreme customer convenience is the challenge.
  • Strong customer authentication is an excellent security approach, but customers find additional security requirements onerous and inconvenient. These requirements form a barrier to customer adoption.
  • A balanced way forward must be found.


What was said: Open APIs are not a requirement of PSD2, but a creation of the industry

What does it mean:

  • PSD2 does not define or require the implementation of open APIs, but existing players have hit on open APIs as a potentially more manageable solution for the multiplex of access, communication, and implementation, which PSD2 requires.


What was said: Over 10-year horizon, Blockchain technology will be a reality, although today there isn’t a killer application for it

What does it mean:

  • The distributed model will play a significant role:
    • KYC
    • Providing mandates to enable a range of transactions
    • Maintain portfolios
    • Facilitating asset transfer
  • Blockchain is finding niche solutions currently in asset registry, betting, and trusted party management.
  • It will likely have a key role in loyalty, FX, and a host of other applications, but in a 10-year horizon with the advent of new digital assets, it will reach maturity.


What was said: 90% of incumbents leave money on the table when technology or regulation disrupts

What does it mean:

  • Business history shows us ‘seizing the opportunity’ comes from using regulation and technology to meet true core needs.
  • Business model innovation becomes the tool to realise the ‘money on the table.’


What was said: Due to growing competition, differentiation will come from focusing on core human needs

What does it mean:

  • It is not enough to just build products and services that meet key drivers for the payment sector, e.g. ‘a new level of transparency.’
  • Scoring product design against trust, ease of use, and personalisation allows for true product differentiation.


What was said: Speed and adaptability will be key in leading to a requirement for new types of partnerships

What does it mean:

  • Legacy infrastructure and governance models prevent both speed and adaptability.
  • New partnerships between startups and technology experts will be required to achieve speed and increase the ability to adapt.

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