An open letter from Tink to European National Competent Authorities (NCAs), calling for flexibility around the PSD2 implementation deadline

By Tomas Prochazka, VP of Product, Tink

Banking is facing its biggest remake in history. Technological developments, changing consumer expectations and new regulations are forcing the industry to open up.

The EU commission’s PSD2 is ushering in the era of open banking by allowing new entrants access to customers’ financial data. Its ambition is to level the playing field in the industry so that more companies can offer consumers greater transparency and better choice of products and services.

Now, there is less than one month until the final regulatory deadline for PSD2 on 14th September. Yet there is clear and compelling evidence that the technology environment mandated by PSD2 is not ready – and the open banking movement is in danger of stalling as a result.

The evidence 

In June, financial institutions in Europe were legally required to give third party providers (TPPs) access to their customer’s data by opening up their PSD2 APIs.

Since then, Tink has undertaken a forensic analysis of the availability and quality of the banks’ APIs. We have concluded that these technology environments are not fit for purpose.

The findings speak for themselves:

Two thirds of financial institutions in Europe published their PSD2 APIs in time for the June deadline. 

Yet not a single one meets the requirements and standards to be compliant. 

. Only 15% are operational in a way that reaches the regulatory requirements for an access interface. Meaning that while they fulfill the required functions, their quality, performance or user experience falls short to become compliant.

. Another 36% of the published APIs contained significant technical issues.

. Over a quarter (26%) are completely unavailable.

The impact 

Ultimately, millions of banking customers across Europe will suffer the consequences.

Put simply, if we are forced to migrate to a substandard API environment, many people may find themselves not being able to use the online or mobile-based banking services they have become accustomed to over the past few years.

Arduous authentication processes, unattractive interfaces, and unreliable service will result in a significant fall in banking customers engaging with new and exciting services.

In the end, we will be depriving consumers of access to the services they have become accustomed to in a pre-PSD2 world. The services that are currently allowing them to make better, more informed financial decisions.

The ask 

We are urging National Competent Authorities (NCAs) across Europe to recognise the analysis and experience of third party providers (TPPs) like Tink, who have worked with the PSD APIs so far.

We are calling on NCAs to acknowledge that the PSD2 technology environments provided by financial institutions are not ready.

We are seeing encouraging signs of flexibility from the UK, France and Germany, and we are asking other NCAs to follow suit and take the following urgent actions:

  1. Guarantee flexibility around the PSD2 implementation deadline. This includes refusing to grant fallback exemptions to banks whose APIs do not yet meet the required standards.
  2. Foster stronger industry collaboration to solve the problem. This means working closely with TPPs and financial institutions to address the current issues with PSD2 APIs, while ensuring that existing services offered by TPPs are not disrupted in the meantime.

The rationale

The fantastic opportunity we have in front of us is in danger. Failing on PSD2 will jeopardise the level playing field that it was designed to create. Most importantly, it will remove choice and a good customer experience for consumers.

We can attest to the fact that a significant number of financial institutions we deal with wants to improve their environments. But they need time and guidance to produce a quality technology environment. They need flexibility around the PSD2 deadline to avoid a cliff edge scenario on the 14th September.

With this deadline now just weeks away, we must acknowledge the reality of the situation.

By taking stock and adopting a pragmatic approach, we can achieve more together in the long term.