The two pathways available are for account information and payment initiation services, so mortgage services have not been targeted explicitly by the regulator yet.
The 59 applications the Financial Conduct Authority (FCA) has seen include extended credit report and credit scoring services, firms producing live financial dashboards for consumers and business services offering financial forecasting and credit transfers.
In a speech today at the pay360 conference, Karina McTeague, director of retail banking supervision at the FCA outlined a raft of the other services looking to benefit from the open architecture banking era, including fintech applicants offering to round up consumer purchases to the nearest pound and investing the digital spare change, to storing loyalty cards digitally.
McTeague said: “From a regulatory perspective, we regard 13 January as simply a key milestone in a longer-term or bigger picture plan.”
She added: “I want to stress the word choice. I’m hearing from banks and others that their customers are concerned that their data will be shared without their permission; that the new services envisaged by PSD2 will be foisted upon them.
“It’s important that we all ensure consumers know and understand that the new Account Information Services and payment initiation service (PIS) offerings are simply that: offerings that they can choose to accept, or not; and, if they do accept, that they can withdraw from at any time.”
Some of the digital applicants for regulation are already operating under Payment Services Directive 1 and looking to expand their activities – others are already operating extensively in other countries and expanding into the UK.
Strong competitors are implementing open APIs in transaction banking and investor services to offer superior customer experience, insight and value to corporate and retail customers.
FCA warns on protectionism
McTeague warned banks and providers that customer communications should be balanced, and not seek to dissuade customers from using third party AIS or PIS providers through their communications or terms and conditions.
McTeague said: “I want to sum up with two words: trust and opportunity.
“I’ve previously said that PSD2 is an opportunity for banks to demonstrate their trustworthiness to their customers – and to consumers generally.
“But trustworthiness is not a matter just for banks. It’s a matter for all players in the payments ecosystem. We all know that perceptions of trustworthiness are determined by actions and words.”
There are four phases to PSD2, with the first phase underway. The second begins when the Regulatory Technical Standards on strong customer authentication and common and secure communication are expected out in H2 2019.
In the interim, jointly with HMT, the regulator expects firms to adhere to basic principles of safety and security to provide additional fraud protection, including transmitting and holding data securely and full disclosure on firm identity.
The third key milestone is in May, when the EU General Data Protection Regulation (GDPR) comes into force, which governs the treatment of data by handlers. The fourth stage is the proposed extension of PSD2 to credit cards, e-money wallets and online savings accounts in 2018/19.
See the FCA website for the full speech.
