European banks have, over the last two years, been navigating an interesting and complicated journey into the world of Open Banking and PSD2.

Here at Accenture, we have gained extensive Open Banking experience working with more than 50 banks globally. We’ve helped them to overcome business, technology and operating model challenges and we’ve recommended best practices for their transition.

How the Open Banking journey began

The surging interest in Open Banking began in January of 2018, when the European Commission enacted Payment Services Directive II (PSD2), an EU-wide banking directive. The aim was to improve customer rights and protection against fraud, while boosting competition by requiring banks to allow third-party payments service providers to access their customers’ bank data and initiate payments for them—provided the customer gives consent.

The European Banking Authority then gave banks until September 14, 2019, to comply with the Regulatory Technical Standards, which involved adapting to consistent application program interface (API) standards and adhering to data privacy (GDPR) and strong customer authentication rules (SCA).

Bumps on the road and deadline extension

But as the deadline approached, the lack of a uniform interpretation of the requirements and challenges in the implementation of the APIs necessary for the data exchange between ecosystem participants made it impossible for most banks to be fully compliant. As a result, a six-month adjustment period was introduced.

For most incumbent banks, this was a significant and extremely complex journey with challenges across several key dimensions, including overall strategy, technology architecture, security, operating models and governance.

The banks that approached us for help in Open Banking/Open API implementation were facing some major hurdles. Such a large-scale implementation, with the need to adapt to a very modern technology stack, was a first for many of them. Others did not have a long-term strategy in place or an operating model to accommodate this new business environment and regulatory regime. Many traditional banks lacked the flexibility in their IT architecture to comply with the standards, while others struggled to make sense of the regulatory requirements.

Three key considerations

The banks that asked for our assistance were struggling in three key areas—technology, organization and partnerships:

  1. How do we address the technology challenges of legacy systems and how do we future-proof technology architecture?
  2. How can we best shape our Open Banking operating model across existing lines of business and how should we define the Open Banking governance?
  3. Who are our new partners and how do we interact with other players in this constantly evolving ecosystem?

Along the way, we’ve learnt many lessons and identified key best practices. I will be sharing these over the next few weeks, starting with technology, in my next post.


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