Banks are not the same as they were some years back. Financial technology futurists foretold the takeover of Application Programming Interfaces (API) in the banking industry. Such digital transformation means breaking the bank’s domination over matters like client information and payment details, for the sake of convenient services. The revolutionary move to open API banking, however, stands to benefit the clients, merchants, and financial institutions. Some of the major underpinnings driving towards the move include instant payments and fast, effortless transactions.

One of the most radical technologies in modern-day digital and convenient banking is the Payment Services Directive 2 (PSD2). It advances the original Directive of Payment Services. Taking on this directive means that the bank has to allow third-party financial providers access to crucial information like client data, banking products, payment infrastructure, and interest rates through open APIs. All banking stakeholders stand to benefit. For the bank, PSD2 comes with new partnerships and services that stream in more revenue. It also brings about the potential for commercial growth, especially through retail banking and the bank can widely extend its roles to various commercial sectors.

The technological innovation brought about by PSD2 enables customers, including merchants and consumers, access to banking services via APIs. Transactions and payments are instant. It supports further innovation by fintech companies like Netclearance which enables them to offer diverse payment services and options at a low-cost and great convenience to traders and their customers. PSD2 in banks, for example, supports mobile payment technology such as the use of beacons. Netclearance’s mBeacon family has diverse mobile payment solutions such as the mBeaconPay and mBeaconSAM that offer new and innovative payment methods. Using mBeaconPay mobile wallets and PSD2 transactions empower retailers and service providers and their clients to cut transaction costs and time. With the bank involved, a merchant does not have to worry about developing a convenient payment option as mbeaconpay ensures the payment goes from the customer’s phone to the trader’s account. What's more, the payment is very secure.

Open API banking with PSD2 is a great convenience to all stakeholders involved, including the bank, third-party financial service providers, financial technology companies, traders and consumers. It is a solution worth the investment. For more information, contact us.