The PSD2 Directive is ushering in a new era of banking. It is the perfect opportunity for entrepreneurs to introduce new digital products and open banking ideas to the market and for fintech startups to flourish.
In addition to banks, payment institutions, and payment operators, the open banking PSD2 Directive introduces new institutions known as TPP – Third Party Providers. Why is this important to startup founders? TPPs will be able to provide two new types of services:
- providing aggregated information on the state of bank accounts (AIS)
- making payments on behalf of a banking customer (PIS)
What does this mean for independent product founders? That your time has come! What the PSD2 and open banking does is, essentially, end the monopoly of banks and open the door to product innovation in the field of payment and banking services.
Your next business venture could be a TPP! Check out which areas you should consider when developing your fintech product based on the PSD2 Directive and open banking concepts:
Managing Multiple Bank Accounts
Open API makes it possible to view all the information from various banks in one interface. Consumers tend to have accounts in various banks for different purposes (e.g., one for everyday expenses, another for a mortgage, and one more for savings). Thanks to Open API, customers can have access to all of their bank accounts from one application.
Easy Online Loans Providers – API used in banking
Open API makes the process of applying for online loans much easier. As for the banking API example, all customer data from different places can be sent directly to other institutions granting loans or credit. Without an open interface, each time we request additional funds, we must provide detailed documentation. The Open API avoids this: with permission from the customer, it collects all data and sends it to other institutions.
Read also: The Best Open Banking Apps Review
Online Payment Security Services
Multiple-step verification (often called Strong Customer Authentication) will be the new norm. To initiate a payment or provide examples of open banking services, it will be necessary to identify the customer by using at least 2 independent authentication methods based on the following:
- the customer’s knowledge – information that is only known to the customer, e.g., PIN number, password
- customer’s possession – something that only the customer has access to, e.g., telephone, token, card
- biometric data – fingerprints, face recognition, etc.
Just think of the possibilities these changes create for the IT sector. Whether it is a new application for the everyday consumer or a specific service for banks, your next digital product could be a TTP!
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January 4, 2021
