Another view on PSD2 by Anthony Verhelpen EY

1. Fintech Summit: regulatory session
Another view on PSD2
14 December2017

2. Confidential — All Rights Reserved — EY 2017 2
Anthony Verhelpen
Senior manager legal & regulatory
t +32 2 774 97 76
m +32 472 80 08 90
e anthony.verhelpen@be.ey.com
• EMEIA PSD2 subject matter expert
• Regular speaker on PSD2
• Specializes in regulatory implementation
and regulatory change management in the
financial sector
The story of today’s 7 minute talk
A. Why payments have escaped the wave of disruptors 2”
1. No free access to payment infrastructure
2. Strong legacy of cards in the EU
3. Increasing costs/risks of compliance and regulation
B. Lack of disruption… … until the arrival of PSD2! 2”
1. No free access to payment infrastructure  Banks must provide access to online
payment accounts
2. Strong legacy of cards in the EU  PSD2 ensures competition with cards
3. Cost of regulation  But: cost of compliance & regulation remains high
C. PSD2 put in practice for FinTechs 3”
1. Payment initiation services
2. Account information services
3. How can the Fintech connect to the bank’s online payment infrastructure?
4. How can the Fintech reduce its regulatory burden?
FinTech Summit Today with you

3. Confidential — All Rights Reserved — EY 2017 3
Lack of disruption for European payments….
Welcome to the age of the disruptors battling for the customer interface
Why payments have escaped the wave of the disruptors
owns no cars
owns no real estate
creates no content
creates no accounts
Increasing costs/risks of
compliance and
regulation
Strong legacy of cards in
the EU
No free access to
payment infrastructure
3
2
1
Driven by the booming e-
commerce market, the
online payments market
continues to grow fast
both in mature and
emerging markets.
… despite rapid growth

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The new payment services directive provides access to bank accounts!
PSD2 and access to accounts enters into effect throughout the EU in the course of 2018
Online
payment
account
Bank
interface
Client
relationship
Fintech
(licensed
TPP)
ACCESS TO
ACCOUNTS
OWN CLIENT
INTERFACE
Lack of disruption….
Increasing costs/risks of
compliance and
regulation
Strong legacy of cards in
the EU
No access to payment
infrastructure
… until the arrival of PSD2
But: cost of compliance &
regulation remains high
PSD2 ensures competition
with cards
Banks must provide access
to online payment accounts

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Examples of use cases
Creating a software bridge between the merchant and the bank of the consumer
Use case 1: payment initiation services
Software bridge between the
merchant and the bank of the
consumer

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Examples of use cases
Client
Client
Providing the client with a holistic view of all cash accounts
Use case 2: account information services
Single
interface
Separate interface of
each bank

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Application programming interfaces (API) becomes the default option
How can the Fintech connect to the bank’s payment infrastructure
Embedded API (client
uses only Fintech app)
Redirecting API (client uses
Fintech and Bank apps)
Security
Regulatory
Customer
exp.
Client
Default option: bank provides dedicated interface (API)
Bank
Customer
interface
Fintech
API
Client
Fall-back option: Fintech uses client interface
Bank
Customer
interface
Fintech
Interface must allow
TPP to identify itself
to the bank

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Outsourcing of the regulatory burden, or automation of regulatory processes
How can the Fintech lower its regulatory burden?
Client
Compliance as a service
Fintech
RegTech: automation of regulatory business processes
Licensed
platform Bank
Licensed platform
provides compliance
services to the
Fintech (AML
sanction screening,
KYC, GDPR, PSD2)
Fintech uses the
white-labeled platform
to provide its services
and reduce its
regulatory costs
Sits alongside existing
infrastructure, governed and
controlled by IT
Emulates human execution of
repetitive processes via existing
user interfaces
Robots are a virtual workforce
controlled by the business
operations teams
Automated solutions work 24/7
Double-digit reduction in error
rates
Robots can be trained by
business users
1. Account
opening KYC
► Automation of the process to identify, gather and build the client profile to
enable an informed decision of the acceptance of the client
2. Alert
investigation
► Prioritisation of alerts for investigation based on defined parameters
3. Negative news
search
► Robotically pre-process negative news search on Google for screening
individuals and organizations
Use case Description

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