Success of PSD2 in jeopardy as banks’ production APIs fail to meet requirements

04-Jul-2019

With PSD2’s Regulatory Technical Standards (RTS) deadline approaching on 14th September, new analysis from Swedish open banking platform Tink reveals that European banks have failed to provide the proper technology environment for third party providers (TPPs) to access payments data as required by the new law. 

European banks were mandated to make their production application programming interfaces (APIs) available by 14th June - three months before the final RTS deadline. Tink’s analysis shows that while 69% of the production APIs were available by the 14th June, not a single API was found to be of sufficient quality to have met the required regulatory standards for integration. 

Banks are welcoming feedback on the quality of their APIsand are showing willingness to improve. However, the lack of the expected seamless transition from the sandbox environment from pre-14th June risks derailing the vision of PSD2 – and compromising the experience of millions of consumers who rely on innovative money management services that they have come to enjoy in a pre-PSD2 era. 

In order to ensure a continued service to end users from September – and in the absence of quality production APIs – third party providers will now need to rely on contingency methods (fallback) stipulated by PSD2. 

However, there is a risk that banks could be let off the hook from providing these contingency methods – and provided an exemption simply on the basis of having made their APIs available, regardless of the quality. This would mean that third party providers are forced to operate in a poor quality working environment. 

It’s against this background that Tomas Prochazka, VP of Product at Tink, called on regulators to enforce an extended transition period after the September deadline to allow banks more time to get the APIs up to standard, and for TPPs to make the necessary transition: 

“With less than three months to go until every financial institution in Europe is required to be fully compliant with PSD2’s RTS, this is concerning news.

“While efforts from both sides are being made to make the deadline work, TPPs all over Europe are being left in the dark. Unanswered questions - such as who will be granted an exemption from providing a fallback method and when these exemptions will be issued - mean they are faced with a suboptimal working environment. 

“It’s in everyone’s interest to make sure that end users are able to continue enjoying the services they have become accustomed to after 14th September – and to ensure PSD2 and the open banking movement are successful. 

"Therefore Tink is calling for an extended transition period during which TPPs will be allowed to access financial data through the PSD2-required contingency methods, while giving the banks sufficient time to produce APIs that meet the required standard.
 
“We’re seeing a positive response from banks wanting to get their production APIs up to standard, and we will work together to make this happen. But as an industry, we must recognise reality and accept that unless we put in place contingency plans, the fantastic opportunity presented by open banking is in peril.”

Methodology: 
Tink has attempted to integrate 84 APIs representing 2,500 banks across 12 markets in Europe. Altogether, these banks cover 90% of the population in each market surveyed. 

The markets surveyed are: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Portugal, Spain, Sweden. API availability in each market is as follows: