PSD2 & GDPR Compliance: How New Regulations Affect the Digital Financial System in Europe

August 3, 2017     By : LTP Team

PSD2 is the directive that is deeply changing the financial system, especially in the payment services segment. It not only affects banks and payment service providers but also companies that are non-bank service providers, like 4Stop.

Alvaro Kurth, Chief Risk Officer at 4Stop, after a long-term professional stint in the banking sector, has developed a deep knowledge of the regulatory environment and is able to analyze the effects of the new changes in compliance requirements. Here is how he sees the regulation evolution and its consequences on 4Stop’s business:

PSD2 & GDPR Compliance: How New Regulations Affect the Digital Financial System in Europe

In an environment where traditional banks have no longer the control of the end-to-end value chain, PSD2 is bringing an evolution in terms of digital identity management and control, customer authentication, KYC and compliance requirements.

PSD2 & GDPR Compliance: How New Regulations Affect the Digital Financial System in Europe

Source: 4Stop

In this revolution, companies like 4Stop provide solutions that optimize the way data is aggregated throughout multiple sources. Businesses that rely on 4Stop and other service providers can now meet current KYC and compliance requirements; and more importantly, be sure that they will meet requirements also in the future when regulations will change and evolve – all of this without any effort from the business.

PSD2 will also contribute to increasing trust in consumers that will be more confident in releasing data to third-party providers. In fact, PSD2 interrelated with other legislative and industry developments, allows member states to reduce borders and have transparent transaction data, a single set of rules, and a lead supervisory authority. In this way, PSD2 will result in increased availability of consumer transaction data.

With PSD2, banks and payment service providers need to change in order to comply with the new regulation, meeting technical requirements imposed to authenticate individuals. Otherwise, they would not be authorized to keep operating within the EU. The implementation of PSD2 will also contribute to building new relationships between organizations in regards to data partnerships and protect consumer interests.

The adaptation process to new directives, requirements, and regulations is an ongoing process with potential delays when enforced by the competent authorities. And here comes the advantage of a third-party provider like 4Stop that easily adapts to an always-in-change global environment and helps banks & payment service providers to adopt real-time solutions – so FIs and PSPs will not have to worry about regulatory challenges and changes.

Another regulation that will be implemented next year aside from PSD2 is GDPR. PSD2 and GDPR present some overlaps in terms of third-party data sharing regulations. New developments are going to take place, and technologies will have to stay updated and flexible to adaptation.

PSD2 and GDPR will complement each other and we will see the increase in consumer confidence in KYC, protection of data, and improvement in data authenticity.

The global financial landscape is changing and it is fundamental to keep up one’s pace to avoid losing out on any opportunity.

About Alvaro Kurth

Alvaro is a seasoned executive expert of risk and compliance matters on a global scale. With over 15+ years in the banking, risk management, and FinTech space, Alvaro has exceptional experience and knowledge to lead the 4S risk team. He is one of the core members at the forefront, ensuring the 4S technology provides businesses with world-class KYC, compliance, and anti-fraud solutions to maximize their business performance; and future-proofing their business to be compliant, stay compliant, combat fraud and grow with confidence.

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LTP Team

LTP Team

A group of content writers, bloggers, journalists and editors from the Let's Talk Payments team.

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LTP Team