Swedish open banking platform Tink has warned that many banks are not providing “the proper technology environment” for third parties to make the most of open banking regulations.
Introduced in 2018, open banking regulations, or PSD2 (Revised Payment Service Directive), require banks in the EU to make transaction information such as bank statements and spending habits available to third parties if customers request it.
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This is designed to enable customers to access financial services such as money advice services or budgeting apps, helping them to better understand and manage their finances.
However, according to a study by Tink, the reaction from financial institutions has not been wholly positive. 39% see open banking regulations as the biggest current threat to their business model and 56% fear that consumer loyalty towards banks will be significantly reduced as a result.
European banks failing to meet open banking deadline
A key part of open banking this is allowing third parties to access banks’ application programming interfaces (APIs), so they can use the financial institution’s data and functionality to build services. European banks were required to make their production APIs available before the 14th of June, with the final Regulatory Technical Standards deadline fast approaching in September.
According to research by Tink, although 69% of European banks made their production APIs available by the 14th of June deadline, none of these APIs were “of sufficient quality to have met the required regulatory standards for integration”. In other words, many banks have not yet made the transition from the old sandbox environment to a more open one now required by PSD2 regulation, meaning “third party providers are forced to operate in a poor quality working environment”.
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By GlobalDataTink has warned that this could jeopardise customers’ access to innovative money management services that have already emerged since PSD2 was brought in and “risks derailing the vision of PSD2”.
Tomas Prochazka, VP of Product at Tink believes that it is in the interest of financial institutions, as well as customers and third parties, to support open banking by complying with regulations:
“With less than three months to go until every financial institution in Europe is required to be fully compliant with PSD2’s RTS, this is concerning news.
“While efforts from both sides are being made to make the deadline work, TPPs all over Europe are being left in the dark. Unanswered questions – such as who will be granted an exemption from providing a fallback method and when these exemptions will be issued – mean they are faced with a suboptimal working environment.
“It’s in everyone’s interest to make sure that end users are able to continue enjoying the services they have become accustomed to after 14th September – and to ensure PSD2 and the open banking movement are successful.”
Read more: A year on, has Open Banking worked?
