BRUSSELS, 6 July 2023 – In a move set to redefine open banking, the European Commission (EC) unveiled a comprehensive proposal that aims to replace the existing PSD2 with the newly revised Payment Services Directive (PSD3). Complementing this are new Financial Data Access (FIDA) rules and a separate Payment Services Regulation (PSR).
The proposed measures, expected to have far-reaching implications for banks, legaltech companies and fintech firms, were warmly welcomed by Lawtech 365 Group, a leader in leveraging Open Banking for source of funds verifications as part of their Verify 365 risk and compliance technology platform for law firms.
Rudi Kesic, CEO at Lawtech 365 Group, remarked: “The new directive represents a milestone in financial services regulation. It provides a progressive framework that is poised to transform the open banking industry and drive the digital revolution in financial services even further.”
The EC’s new directive targets a sweeping modernisation of the EU’s retail payments industry and the financial services sector as a whole. Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, underscored the importance of the proposed changes. “In the EU’s growing data economy, it is vital that consumers remain in control of their payments and data. We are proposing enhanced protection for consumers making electronic payments in the EU, improved criteria to prevent and remedy payment fraud, and ensuring customers and businesses benefit from more innovative payment and financial service options,” said McGuinness.
The proposal focuses on six key areas: combating payment fraud, enhancing consumer rights, levelling the playing field for access to payment systems, advancing open banking, improving cash availability, and enforcing the rules more robustly.
Acknowledging the rapidly evolving digital landscape, Todd Clyde, CEO of Token.io, an account-to-account payment infrastructure provider, also welcomed the European Commission’s proposals. “The revised regulatory framework is an exciting development for the payments industry. It demonstrates the EU’s commitment to creating a stronger foundation and infrastructure for open banking-powered payments solutions across the European market. API-based interfaces provide the most secure and performant way for third-party providers to interface with banks, and we see this as a major step towards enhancing services and outcomes for end-users.”
However, not all reactions to the proposals were positive. Controversial elements, such as the potential for banks to charge for data access, sparked concerns among some stakeholders. Klarna, a key player in the fintech industry, voiced its apprehension about the proposal’s provision allowing banks to charge for accessing consumer data, arguing that personal data belongs to the consumer and should not be used as an expensive barrier to access services.
Responding to these concerns, Mr. Kesic emphasised: “While certain aspects of the proposals will require careful examination and negotiation, the overall direction is encouraging. PSD3 represents a significant step forward, unlocking new possibilities for fintech innovation and enhanced customer experiences.”
The measures announced today represent a pivotal moment in the financial services sector. Lawtech 365 Group, along with other industry stakeholders, look forward to contributing to the forthcoming discussions as the industry navigates the transition to these new standards.
About Lawtech 365 Group:
Lawtech 365 Group is a leading innovator in legal technology, utilising open banking for risk management, AML compliance and source of funds verifications as part of its Verify 365 Risk and Compliance technology platform for law firms. With offices in London, Singapore, Sydney and Toronto, they are dedicated to improving the security, efficiency, and compliance of legal processes through the power of technology.
