The banking industry has failed to embrace the opportunity to provide identity authenticating services under the Payments Service Directive (PSD) II, said a panel at at EBAday annual congress in Amsterdam.
It may now be too late to start innovating, as Erik Tak, global head of card solutions at ING, said: “Accidents will happen to some extent before we plug that hole.”
Giorgio Ferrero, executive chairman of MyBank, pointed out that the key objectives of the regulation is to make this safer and simpler. He said that banks already have the right tools in place but should be “less shy”, and stop complaining and start monetising.
According to Mark Hartley of FIS, banks should not resist allowing authentication parties to innovate themselves and build competition, while Tak suggested that banks are afraid that authenticators will “cannibalise” on the card interchange income, and so could miss out on an “opportunity for something that is much bigger”.
Hartley said, however, that the process is “skewed” in terms of liability, as banks are seen as responsible when they are not conducting authentication.
The panellists agreed that one of the main issues is trust in the payments authentication system.
Hartley said that “the challenge the industry faces … is to make sure it is secure”, while Ferrero added: “What they need is certainty.”
Hartley concluded to say that banks “have to embrace collaboration and working with third parties”, as the institutions are unlikely to be the ones behind the most innovative new apps.
“We might see some new business models,” he said. “PDS II opens the way for that to continue.”
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