LFP060 – PSD2 & Open Banking in UK & Europe with Paul Thomalla ACI Worldwide

ACI London Fintech PodcastI’m delighted to be joined by Paul Thomalla expert on the upcoming changes in open-banking, SVP at ACI Worldwide, member of the Payments Strategy Forum (PSF) and board member at Nexo Standards.

Upcoming changes re opening payments to non-banks and opening access to bank account data will change the industry. On top of this we have UK and European initiatives in re (even before Brexit). It’s all swirling round and I thought we needed a guide to clarify where it all is and where it’s all going.

Paul Thomalla SVP global corporate relations and business development CASUALBut first some intros to Paul’s hats.

ACI Worldwide, founded in 1975, is one of these perhaps behind the scenes incumbent payments companies that most of you may not have heard of. Suffice it to say they do $14 trillion of payments per … wait for it … day (!!) Interestingly staff numbers are around 5,000 so that looks to me like $3bn per staff member per day. Either their fingers move fast or do you know what … incumbents can use tech as well or even better than those assailing the castle might ever think.

Lazy Fintech commentators and those with little experience in FS – two categories summed up in many a LinkedIn so-called thought leader article – often talk about FS as if FS were basically almost entirely Banks. As listeners to the show will know its far from that. There is a vast ecosystem of players into which Fintechs are trying to find themselves a place at the table.

In LFP049 we had the pleasure of talking to Rich Wagner, Chairman of the Emerging Payments Association. The Payments Strategy Forum is another player in the equation – Paul can explain the whole meta-process of how incumbents, startups, associations and forums and the regulator and legislators interact to produce the FS world we live in.

Oh yes and we start the show with a story which will take the all-time London Fintech Podcast record for anecdotes – taking an ex-US President to a pub in London.

Topics discussed include:

– which President, which pub, what they had for dinner and what happened next

– getting the mix right for live music

– what was PSD1?

– the Big Pic Q – what is this all about?

– various agendas behind PSD2 – not just the “increase competition” agenda but the “anti-cash” agenda as a thread in all this

– regulators having come to realise that implicitly they have been preserving the status quo re institutions and the breaking from this model to encouraging new players

– what is the payments problem? Limited use cases but also a whole pile of legacy technology behind it all (“most banks will have hundreds of payments systems which is not sustainable”)

– PSD2 is actually more accurately PSD3 🙂

– PSD is trying to get a statement of how payments will work across Europe – not just for European players but for any outside the zone (eg US banks) who will move payments into Europe (this being a large departure in itself); “it’s a law essentially”.  It also allows non-banks to move money (providing they pass a technical test).

– how getting access to a bank account data is involved in all this

– how this will work for individuals re sharing their data

– “the actual bank account at the heart of the bank is the Holy Grail of it all”

– what TPP’s are

– current timetabled to become law in 2018 … “in this world that’s now”

– how the PSF relates to all this – the UK’s process around all of this

– why clearing was originally 5 days (think horses)

– the composition of the PSF, the PSR’s role in setting it up, why it was and its working groups

– how the twin outputs of necessary regulation and legislation will be handled

– interestingly neither the PSF or PSD will mandate using APIs … just the requirement to share (&why everyone is converging on APIs as the solution)

– what this will all mean for banks and banking … “loans and payments pretty much make up all the profits of banks at the moment”

– the role of data in terms of everyone moving forwards

– parallels with the introduction of the internet

– ACI Worldwide as positioned uniquely across the many payments silos and thus they are well poised to understand the issues of all of the parties; thus they have a certain amount of agnosticism about where this all goes (as opposed to most incumbents who have vested interests)

And much much more 🙂

Share and enjoy!