Impact PSD2 will have on the Lending Industry
The adoption of EU Revised Payment Service Directive has set the stage for open banking in Europe. The global lending industry is witnessing changes in terms of services, processes, and technology. Although it would be too early to ascertain the impact of the directive on the industry, it will stimulate the development of new lending models and a wide range of banking services.
At the core, PSD2 is a directive that is designed by European Union that aims to infuse competition and transparency across the European financial market. The directive also aims at improving the security of online payments and account data. In general, PSD2 also promises to offer customers better control over their payments and finances.
How PSD2 will effect banks?
Banks have been so far enjoyed a superior position in the finance sector holding monopoly at perhaps all the financial services. This is going to be change radically with the introduction of PSD2 as the directive allows the entrance of new players that will leverage technology to offer new and advanced services. It is the effect that more and more consumers are moving towards online lending platforms rather seeking assistance from banks.
How PSD2 will effect lenders?
PSD2 poses huge opportunities to Fintech firms in the lending sector. The directive forces banks to share access to user data to develop new services on top it. The directive introduces two types of third party service providers in the market:
AISP or Account Information Service Provider — Third party which can access financial data from various sources to provide an aggregated view of customer data to Fintech companies for better and detailed analysis.
PISP or Payment Initiation Service Provider — Third party which will be able to initiate payments on behalf of the customers, e.g., paying credit card bills, etc.
The lending sector is versatile and how PSD2 will add to that versatility only times will tell. To read our complete take on the effects of PSD2 in the lending market, go to: https://akeo.tech/blog/fintech/impact-psd2-will-have-on-lending-industry/