In 2016, I wrote a LinkedIn article “Scheming about standards” which talked about the need for a scheme management function for Open Banking and PSD2. The opinions in the article had come about after years of work and discussions with colleagues from the industry including the European Commission (EC), the European Central Bank, (ECB), the European Payments Council (EPC) and national schemes like iDEAL
The Berlin Group conference was a trip down memory lane, both in terms of content but also the actual people who have shared a conversation for more than a decade.
Let’s start with some facts. The Berlin Group conference was a very well run, two day event broadly split into three types of content. Firstly, regulatory context and updates about the direction of travel in Europe for Open Banking and Open Finance. Secondly, market demand for new ‘open’ services and how the Berlin Group is working to extend their standards to meet new business requirements and, thirdly, some interesting case studies on how Berlin Group standards are being used in other countries (Israel, Georgia and Ukraine). I’m going to concentrate on the first one.
The European Commission was able to shed some light on the upcoming (28th July) legislative proposal for PSD3: “evolution not revolution”, ”clarify obstacles” and “simplify the framework”. Dirk Haubrich of the EBA came in with a clear and short analysis of whether PSD2 had met its objectives and what should be done where it hadn’t.
There was an interesting tension between the EC maintaining a position of “no central standard” and the EBA advocating a central standard for all of Europe. Ulrich Bindseil of the ECB spent some time discussing what they had done, through the Euro Retail Payments Board (ERPB), to promote the SEPA Payment Access to Account Scheme (SPAA), and Gijs Boudewijn, representing the EPC SPAA work, successfully rattled through the history of SPAA – where it is now and what are the ‘crunch’ moments. Followers of SPAA will not be surprised to hear that the key roadblock is the “business model” but there is hope of a way forward in the coming weeks. Ralf Ohlhausen from the European TPP Association spoke on behalf of the Fintech community and Emmanuelle Choukroun from Société Générale from the bank side, both giving positions that were reasonable.
Everybody joined a big panel session at the end, that had more people than chairs, where all agreed that collaboration was essential and that we should work together.
- But now to come back to my opening point: Both the Commission and the EBA described the success of the Open Banking part of PSD2 as “mixed” and spoke about enforcement and supervision. Again and again, both in the presentations and from the side discussions, came out the lack of a central programme (or scheme) management function.
The inability of 30 National Competent Authorities to drive (or even understand!) the market. The lack of natural European establishment to house this function. Continued fragmentation across countries, the fact that nobody actually knows how many transactions there are in Europe, whether the number is growing or not, and how it is split between Account Information and Payment Initiation services. Discussions on the side indicate that volumes and usage are just not where they were expected to be.
The difficulty that the regulators find themselves in explains the focus that was put on SPAA as the hope of a private sector scheme that would solve the problems and kick-start innovation. The people working on it are putting in a lot of effort to bring it to life, but there are massive challenges. Strangely, nobody was talking about the EPC’s other (similar?) scheme – SEPA Request to Pay, nor EPI (European Payments Initiative) which recently acquired iDEAL and Payconiq.
I said it in 2016. The ERPB PIS report in 2017, which we were part of, said it and my conclusion from the Berlin Group conference backs it up: Europe needs a program management body (whether as a scheme, a self-funded utility or a public resource) with operational tools and ongoing reporting to be able to track, and evolve Open Banking, Open Finance and Open Data.
For those who want to know more, OBE ran a Public Webinar in September 2021 explaining the different European schemes and standards approaches in Europe, and I chaired a panel discussion in February 2022 with the ECB, EPC and Société Générale, discussing the role of schemes in European Open Banking and Open Finance.
I have to give a shout-out to the organisers of the event who did a great job on the logistics and to Dr Michael Salmony who facilitated the event with his normal brevity and wit and managing to get in some slightly punchy digs with a big smile.