Startup joins throng of firms targeting banks for PSD2 compliance

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Many large European banks are developing their own services to comply with the data-sharing requirements of PSD2, but thousands of smaller and midsize organizations will need help, seeding the growth of startups specializing in open banking tools.

One example is Konsentus, a U.K. consulting firm opening its doors this week to help financial institutions across Europe meet the open banking requirements of PSD2 with a do-it-yourself approach to data sharing that leverages APIs.

Konsentus offers a streamlined service enabling financial institutions to build their own API solutions and integrate the startup’s consent and preference management platform, said Mike Woods, CEO, a former NatWest executive. His partners include MBNA veteran Brendan Jones and David Parker, CEO of Polymath Consulting.

The firm will have plenty of company in the rapidly expanding niche of PSD2 compliance solution providers.

“At the recent Paris Fintech Forum there were a lot of companies saying they will aggregate all the [data] of all financial institutions, so you’ll only need a single integration to get access to everyone, but they may be thinking only of large banks—in fact there are at least 8,500 organizations [across Europe] affected by PSD2,” Woods said.

Konsentus is positioning itself to serve a broad swath of financial organizations setting up new data-sharing processes following this month’s publication of the tech standards for PSD2 compliance, according to Woods. Prospects range from large banks in each of the 28 affected markets down to small e-money issuers, credit unions, payment institutions and even specialist wallet providers in the gambling industry, he said.

“We can supply a simple API solution for consent and preference management to the many financial institutions across Europe that do not have the resources, time, money, knowledge or risk appetite to build it themselves,” Woods said.

Most banks are already well on their way to developing technology for compliance with the new regulations, and a few—such as Sweden's Nordea—have gone live with their own services to share data with other organizations, said Gareth Lodge, a senior analyst with London-based Celent.

New and existing payments consulting firms aim to aid organizations in complying with PSD2, including API-brokering firms, networks that enable organizations to exchange data, and firms licensing software to grant permission to share data, Lodge said.

"I think the technology is part of the solution, but the [PSD2] requirements will continue to evolve. This means the banks will need to become much better at managing data, something that’s likely to become more sophisticated," he said.

Many banks also will be seeking access to more widely available data to improve their own client services, Lodge said. An example of such a concept could be providing business banking customers with a broad-view “account of accounts,” which could have big benefits for corporate payments, he said.

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