Payment Services Directive 2 (PSD2) – Paving The Way For Open Banking

The revised Payment Services Directive (PSD2), applicable since 13 January 2018, has paved the way for Open Banking. Open Banking describes a shift from a closed model of banking to one in which customer data is shared between different members of the banking ecosystem. Starting from 14 September 2019, banks and other financial institutions are required to share customer banking, transaction and other financial data for free with so-called third-party providers (TPP), provided the customer grants explicit consent. This is achieved through the use of technical interfaces, i.e. application programming interfaces (APIs). These APIs are intended to enable TPPs (including financial service providers and FinTechs) to create efficient and client-tailored banking solutions.