Clear standardisation is crucial to unlocking the opportunities of the second Payment Services Directive (PSD2) and Open Banking, according to Deutsche Bank.

In a white paper published yesterday, the investment bank warned that in order for banks, corporates and FinTechs to make a success of Open Banking, there is a need for standardisation of application programming interfaces (APIs), which are likely to underpin such systems.

If the chance to evolve systems and APIs - described as the ‘crucial building blocks’ needed for compliance with the new regulations - is not taken now, the bank says businesses risk missing out on the new era of payment solutions which has emerged with the arrival of regulations including PSD2 in Europe.

The Deustche Bank paper, produced in collaboration with payments consultancy Innopay, highlighted the fact that after September 2019, PSD2 will enable banks to provide access to authorised payments providers to a wide range of client bank account data.

However, the paper argued, if the “access to accounts” element of PSD2 is not implemented properly, with due collaboration and standardisation across borders, there is a serious risk of market fragmentation.

This could stymie PSD2’s potential for innovative payment and account information services in which the customer is fully in control of sharing their assets or personal data with the providers of their choice.

PSD2 legislation came into force on 13 January 2018, however from September 2019 its full provisions come into effect, including a requirement for banks to give third-party payment providers access to their customer accounts through a new interface.

This access will most likely be facilitated through the use of APIs and is seen as a first step on the road to full use of Open Banking, which it is hoped will further enable banks and third parties to build a cluster of products and financial services around the same data.

Shahrokh Moinian, head of cash products at Deutshche Bank, said many corporates are only just beginning to wake up to the opportunities that European regulations such as PSD2 will open up in relation to streamlining and reducing the cost of payments and providing access to new services.

“Of course, there are also significant rewards on offer for the banks and fintechs that best provide this enhanced payments service,” he added.

For banks, FinTechs and financial services companies preparing for these changes, the paper recommended the following solutions:

- Collaboration: becoming actively involved in working groups on harmonisation and implementation of standards, either in co-developing API standards or working to provide services such as API testing.

- Joining a central directory such as PRETA, which innovates market competitive services in digital payment and identity solutions.

- For smaller players, participating in local banking associations to work together on drawing up standards.

Christian Schaefer, head of payments, corporate cash management at Deutsche Bank, said: “Making PSD2 work in practice, and ensuring the implemented interfaces are interoperable, depends on a minimum level of harmonisation and agreement of common standards.”

“A half-hearted, hesitant and fragmented introduction of providing access to accounts will jeopardise opportunities for all, ” he concluded.

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