• Open banking
  • PSD2

Corporates in the dark on PSD2

by Ben Poole and Graham Buck

Published: 28 September 2018

The flurry of activity on open banking leaves most treasurers bemused and sceptical. Ben Poole and Graham Buck report.

The advent of European Union’s new Payment Services Directive (PSD2), which opens up the world of open banking and encourages greater competition, might be on the radar screen of disruptive companies like Uber or Deliveroo, but has so far made only a limited impact on Europe’s treasurers.

Paul Misere, Medtronic

In an audience poll on Day Two of the EuroFinance International Treasury Management conference, delegates were asked ‘PSD2 is making headlines – how prepared are you?’ 55% responded that either that they had done nothing or they didn’t consider PSD2 relevant.

While real-time payments or application program interfaces (APIs) consume the attention of companies depending on app-using consumers, the experience of wholesale or industrial businesses is quite different.

Indeed, Paul Misere, EMEA treasurer at Dublin-based medical equipment manufacturer Medtronic confessed that he’d Googled ahead of the session to read up on PSD2. It wasn’t yet a ‘hot topic’ for treasurers, who were waiting to see whether it proved to be a facilitator or a disruptor.

“It’s been less disruptive that was anticipated,” added Albert Hollema, group treasurer at Dutch media company Endemol Shine Group, with both treasurers agreeing that they were waiting to see what new products and services their banks would now be able to deliver.

Moinian said that banks had two options when responding to PSD2; to simply focus on the compliance aspect, which would be a “lost opportunity” or to use it as an enabler and an opportunity to “move up to the next level” in extending their range of services.

Ireti Samuel-Ogbu, EMEA head of payments and receivables at Citi commented that there is a fragmented approach to open banking, with the UK taking a fast track approach while it won’t be kicking off until September 2019 in Europe when the regulatory technical standards go live.

The challenge is that there is an open infrastructure but no standards in place in terms of third party payment providers (including banks ) connect. She said that without agreement on these standards in place, there could be in the worse case scenario “4000 standards for 4000 banks” across Europe come next September.

Albert Hollema, Endemol Shine Group

The APIs promoted by open banking will allow corporates services such as real-time balance information at any time and the ability to make ‘just-in-time’ payments. Although banks put emphasis on the benefits of real time payments, corporates seemed less than convinced.

“Payments for me should not be a surprise but a totally predictable and controlled process,” said Endemol’s Hollema. “We pay twice a month, real-time payments are no benefit for me. But real-time collections could be interesting”.

Misere noted that corporate treasurers and bankers cherish their family time, so he doesn’t see a need for real-time, 24/7 payments in every situation – aside from big ticket transactions such as an M&A. He did say that these new technologies may enable banks to rethink their solutions and overall business models.