Report from Eurofinance's 27th annual treasury management conference.
Approximately 60% of treasurers believe PSD2 and open banking are not relevant to them, according to a live audience poll at Eurofinance's International Treasury Management (EuroFinance) conference in Geneva on 27 September.
The Revised Payment Services Directive (PSD2) went live on 13 January and promised to open up a new world of third-party payment and banking services to businesses and consumers that grant access to their bank account information.
However, EuroFinance plenary session panelist Paul Misere, EMEA treasurer for Dutch medical technology company Medtronic, said that until he was asked to speak on a panel about PSD2, he'd never heard of it. “I had to Google it,” he said. “PSD2 and open banking is not a hot topic for a lot of multinationals. Treasurers need to have a dialogue with their banks about the opportunities open banking provides,” he added.
Ireti Samuel-Ogbu, managing director and EMEA head, Payments & Receivables at Citi Treasury & Trade Solutions, said there was a disconnect between the start of open banking in January this year and the execution of it. “The UK has fast-tracked open banking,” she said. “The Competition and Market Authority (CMA) has mandated nine UK banks publish a single Application Programming Interface (API). But it doesn't look like open banking will go live in Europe until September 2019 when the Regulatory Technical Standards [for open and secure electronic payments under the PSD2] are in place,” she said.
Whilst the CMA in the UK has a single standard for open banking APIs, Samuel-Ogbu said Europe could potentially have 4,000 different API banking standards given that there are 4,000 banks in Europe.
The banks or SWIFT will need to come up with a standard for open banking APIs, said Paul Misere of Medtronic. He said he wanted to better understand whether PSD2 and open banking would be a 'disruptor' for technology and software providers like SWIFT and Finastra.
Plenary session panelist Albert Hollema, group treasurer at Dutch television production company Endemol Shine Group, said initially he thought open banking would be 'disruptive,' but that hadn't turned out to be the case. “Maybe open banking could give us better cash pooling, cash distribution and spend analysis as we would have access to all bank accounts in one environment,” he said.
Shahrokh Moinian, managing director and global head of cash products at Deutsche Bank, described PSD2 as one of the biggest disruptors, although he said its full effect had not been realised yet. “We're using open banking to be on the front foot to provide corporate clients with more services,” he said during Wednesday morning's plenary session at EuroFinance.
Although a number of multibanked companies already use SWIFT for reporting of account information, Samuel-Ogbu explained that open banking provided an opportunity to access other banks accounts in real-time using APIs.
“PSD2 gives companies the ability to make just-in-time payments,” she said. “Companies can see what balances they have in real time and fund just in time. APIs give real-time 24/7 rather than end of day or start of day information, which gives companies the ability not only make payments just in time, but to consolidate liquidity or sweep funds just in time,” she said.
Moinian pointed to other benefits from open banking APIs such as real-time multibank cash pooling and a real-time dashboard to help treasurers manage their risks and currency positions.
“Bring it on,” said Misere, referring to real-time balance information under PSD2. He said the ability to make real-time payments could help treasurers when it came to ensuring the money was is in the right place at the right time to fund merger and acquisition transactions.
PSD2 creates two new categories of payment service providers: Account Information Service Providers (AISPs), which can use open banking to aggregate account information across multiple banks; and Payment Initiation Service Providers (PISPs). PISPs or AISPs could either be banks or fintechs, said Samuel-Ogbu.
PSD2 also creates new collection instruments such as Request for Payment, which Samuel-Ogbu said would help online companies accelerate working capital by requesting a payment from consumers. As the payment is authorised by the customer, it also minimizes the potential for fraud, she added.