However the remaining uncertainties (and conflicts) around the implementation of PSD2 in practice are resolved, open banking, driven by open APIs, is becoming a reality. The banks will not be able to alter the reality of increased competition, and the good news is, for the most part they do not appear to want to (anymore). In light of this evolution of the banks’ thinking, Finextra’s five key takeaways from this research into PSD2 and open banking are:

1) Open banking will be the environment in which financial institutions operate, not just in Europe, but globally. Therefore, all banks should emulate the approach of the leaders and many of those interviewed for this research and embrace open banking and open APIs, to comply with regulation, but also to go beyond it and deliver what customers need.

2) For established banks, legacy systems are an unavoidable reality. Digitalisation is a challenge for banks and the open banking and open API element of this is no exception. However, necessity is the mother of invention and there are tools aplenty on the market to assist banks in achieving a smooth transition to an open banking future. Banks need to leverage these tools to ensure a streamlined implementation of their open banking capabilities.

3) One standard lowest-common-denominator API won’t deliver what the industry and its customers need but nor will as many APIs as there are account holding institutions, so some kind of mechanism is required to ensure that the situation becomes more not less coherent. This could be some kind of standard around the API or it could be some function of the marketplace (provided by aggregators) or both. In any event, all banks should play an active role in calling for and contributing to efforts to avoid fragmentation and achieve coherence


4) It may already becoming a cliché to suggest that banks should collaborate and not compete with fintechs, but for anyone in any doubt PSD2 and open banking should be the deciding factors. Open APIs make collaboration practically easier and the changing competitive landscape of open banking make collaboration commercially necessary. Banks should partner with fintechs that can provide interesting new compelling customer propositions that complement their existing offerings and complete their customer relationship propositions and they should exploit the fintechs’ greater agility and technological openness to do this in a timely manner.
5) PSD2 is not happening in a vacuum, but it has to be complied with and therefore has budget and resource attached to it. In this sense it is a gift, and banks have the opportunity to make the most of PSD2 to drive digitalisation and ecosystem thinking, and to justify investment in the provision of orchestration and contextual capabilities. This will help them to define – and secure – their roles in the digital ecosystem going forward.