The new EU Directive PSD2 (Payment Service Directive 2) will come into force in Germany on 13 January 2018. From this point onwards, banks must make a publicly accessible interface (so-called APIs) available, which third parties such as FinTechs could use to view account data and initiate payments. The new Directive’s aim is to promote innovation, competition and security, as well as to reduce transaction costs.
However, the PSD2 includes both rights and obligations for FinTechs. There are licence and registration requirements for FinTechs in Germany, without which their business activity can be prohibited by the Federal Financial Supervisory Authority (BaFin). The majority of FinTechs will be subject to this PSD2 regulation in Germany in the future and will have to go through lengthy, bureaucratic audit processes. This also applies to Centralway Numbrs.
This is why we have been preparing intensively for the PSD2 regulation for several weeks and have been implementing BaFin’s obligations and requirements internally. For example, these include:
- Adjustments to our IT infrastructure
- Technical changes in our data structure
- Changes to the app design
- Development of new technical interfaces
- Enhancing existing app features
- Various training courses for all employees
- Many hundreds of pages of process documentation
- Disclosure of financial figure
- ..and lots more.
The amount of effort put into this is enormous and can be achieved only by employing lots of staff. The effort required for this is associated with additional staffing costs. It is for this reason that smaller FinTech startups will find it especially difficult to satisfy the complex requirements and obligations of the PSD2 regulation.
The liberalisation and intensification of the competition which comes with the PSD2 will accelerate digital change in financial services. On the other hand, the licence requirement may also mean that some FinTech startups that do not obtain or cannot afford a licence will disappear and the user would have switch to another app.
We will only find out the practical repercussions of the advantages and disadvantages once the PSD2 regulation comes into force. Centralway Numbrs will comply with the rules and regulations of the BaFin in any case and has the goal of being completed PSD2-regulated by January.
