This slide deck was used comprehensively discuss 'OpenBanking' based on PSD2 standard and touch on GDPR. Discuss the technologies to be used to cater for PSD2 requirements. Finally it looks at the Sri Lankan financial industry and how PSD2 concepts can be applied there.
3. International Financial Industry
Concerns
➢Contribute to a more integrated and
efficient European payments market
➢Improve the level playing field for PSPs
(including new players)
➢Make payments safer and more secure
➢Online shopping without a credit card
➢Better protection against fraud
➢Help lower charges for consumers on
card payments
5. Payment Services Directive 2
EU Directive that applies to
all Banks operating in the EU
that regulates payment
services throughout the EU,
with a compliance deadline of
January 2018
6. Open Banking
1 : Possible central view
Banks expose their customer payment and account data, with customer consent, to
Third party Payment Providers (TPPs) via APIs.
TPP
PISP/AISP
Bank A
Bank B
Bank C
Merchant
Now PSD2
Bank A
Bank B
Bank C
Merchant
7. Open Banking
2 : No Involvement of Card Network
7
➢ Less hops
➢ Lower fees for transactions
➢ Easy to track the path
12. Ref : Accenture Payment Services & Accenture Technology Advisory, PSD2 & Open Banking Security and Fraud Impacts on Banks
Strong Customer Authentication Ctd..
13. Adaptive Authentication
➢ Authentication flow is defined by risk level
➢ PSD2 define several exemptions for SCA applications
○ Not to kill user experience for small transactions and bulk transactions
➢ Security level can be decided based on,
○ The amount of transaction
○ Time elapsed from previous SCA
○ Transaction patterns on user
○ Role of user - Cooperate or private
14. Consent Management
➢ Defined by PSD2 RTS on SCA and secure communication and GDPR
➢ Safeguard right of the user on personal data to,
○ be informed - Inform user of personal data collection
○ access - Validate information processing at any time
○ rectification - When user feels data is incomplete or accurate
○ restrict data processing - Just store, don’t process
○ data portability - Transfer data to another party
○ forgotten - Request removal of personal data
○ be notified on a data breach - Report to user within 72 hours
22. Ref : Deutsche Bank Global Transaction Banking - Payment Services Directive 2
1. One-leg Out – in EEA currency: EEA currency sent from the EEA to a non-EEA country
e.g. EUR payment from France to Sri Lanka
1. One-leg Out – in non-EEA currency: Non-EEA currency sent from the EEA to a non-EEA country
e.g. LKR payment from UK to Sri Lanka
1. One-leg in – in EEA currency: EEA currency payment sent from a non-EEA country to an EEA country
e.g. EUR payment from Sri Lanka to France
1. One-leg in – in non-EEA currency: Non-EEA currency sent from a non-EEA country to an EEA country
e.g. LKR payment from Sri Lanka to UK
PSD2 Impact
on Us
PTS DSS - PIN Transaction Security Data Security Standard
Open Banking is due to become a regulation in Australia (similar to the enforcement of PSD2 regulation in the EU). Therefore, Banks need to be able to securely expose sensitive data through APIs so that third party providers can build new applications that provide a much better user experience to multi-banked customers.
Incident Reporting Guidelines -set methodology for payment service providers in order to determine whether an operational or security incident should be considered major and, therefore, be notified to the competent authority in the home Member State
Upto 80% of attacks are based on stolen user credentials… One proof from ancient stories Ali baba and 40 thieves.
Behavioral factors such as walking style, typing are also considered now as another factor
Incident Reporting Guidelines -set methodology for payment service providers in order to determine whether an operational or security incident should be considered major and, therefore, be notified to the competent authority in the home Member State
Incident Reporting Guidelines -set methodology for payment service providers in order to determine whether an operational or security incident should be considered major and, therefore, be notified to the competent authority in the home Member State
Exposing APIs can seem to commoditize banks by threatening to take away the sole ownership of customer data that banks so far enjoyed exculsively. However, Banks armed with the correct vision and the technology to achieve that can reap much more benefits from this open banking world. Survey conducted in UK by Accenture showed that consumers prefer Banks to be the ones to provide the 3rd party services as well. If and when Banks can take up that role, they become a rich repository of customer data across multiple banks.
They can then use that repository to…
Provide better services to their customers (eg:- cashflow management across banks)
Provide ‘Insight Sales’ to other businesses. (-> attract new revenue streams)
Incident Reporting Guidelines -set methodology for payment service providers in order to determine whether an operational or security incident should be considered major and, therefore, be notified to the competent authority in the home Member State
Core banking solution, Customer Integrated System, usually has
• SWIFT terminals
• ATM and POS solutions
• MICR checks handler
• Phone banking (IVR)