Urs Meier, Technical Architect, TCS Financial Solutions

The advent of the fintechs (financial technology companies) and their impressive array of services has been the topic of discussion for more than a year now. Whether they will replace banks or will collaboration be the way forward remains to be seen.

The first Payments Services Directive in 2007 led to significant growth in payment technology, and we are today in the era of point of sale (POS) payments. Fintechs or PSPs (Payment Service Providers) are able to help customers initiate payments from their banks accounts but, more importantly, outside of the existing banking ecosystem. PSD2 (Payment Services Directive 2) brings in a new direction in payments regulation by expanding its scope to include fintechs that do not enter the traditional flow of funds.

PSD2 is not just another new clearing scheme like SEPA or standard ISO 20022 implementation. Looked at as a propeller for fintech growth, it is expected to completely transform the payments landscape, ensuring a level playing field for Banks (Account Servicing Institutions) and Payment Service Providers (PSPs) as far as payment initiation and servicing are concerned.

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