What’s the difference between the Marketplace and PSD2?


#1

There’s an awful lot of talk in the financial press re: the arrival of PSD2 in January. As I understand it, this is where you approve the use of your transactional data by third-parties for them to provide some sort of value-added service to the customer. Of course the potential ‘cost’ to the customer is the privacy of their transactions.

Probably one for Starling really to answer (unless anybody else knows), but how does the Starling Marketplace differ from PSD2? Is it the same thing but under a different name?


#2

Hi Rob!

Someone will be able to give more detail, but PSDII (pan-european) focuses mainly on payment services rather than open APIs, it is Open Banking (UK) which allows for the use of APIs to draw transaction data from bank to bank.

This is a great resource for understanding open banking in more detail: https://www.openbanking.org.uk/about/

For PSDII: https://www.paymentsuk.org.uk/sites/default/files/PSD2%20report%20June%202016.pdf

TL;DR: The Starling marketplace will utilise both PSD II and Open Banking, but is not the same as these two things. Starling has a great API already which puts it way ahead of the incumbent banks - they’re on the front foot in terms of allowing third parties to safely and efficiently access the data you want them to.

Hope this helps!

Source: work at a large incumbent on Open Banking projects.


#3

Awesome @JustJoliver - thanks so much - I shall have a proper read. I think for those ‘in the know’ it all makes perfect sense, but outside the financial loop you tend to feel things are happening and consumers are being left behind. I guess I’m just a nosey bugger and want to know what this all about!

Thanks again :+1:


#4

@Rob you are absolutely right. With all of this, the question is “Ok yeah cool but how do I explain it to my gran?” and the answer generally is “Well you can’t because we don’t really know what it looks like in reality yet.”

It’s going to be a slow process to see it picked up by things in your day to day life - one example will be making payments for things through Facebook directly, or Google, or iMessages on your iPhone (all of whom I believe have applied for their payment licences).

Other examples might be mortgage switchers, where brokers will be killed to death by a third party app that analyses all your spending, credit and income to give you the best mortgage for you based on your data. Objective and open decision making for customers is the end goal!

Enjoy researching and tug on the rope three times if you need pulling up from the rabbit hole. :smiley:


#5

@JustJoliver Thanks for posting that info, its really interesting. I think you’re right in that we don’t really know what it will look like, but I’m excited by some of the possibilities.

Im keen to know how banks (both incumbents and challengers) are dealing with the security and fraud risks associated with giving third parties access to customer’s accounts.


#6

Great input from @JustJoliver.

Just to add to the point he makes, it’s a real privilege for us that Starling already has a more sophisticated API contract with partners (in other words, a richer set of functionality that marketplace partners can dip into) as the OpenBanking initiative in the UK (the response to PSD2) is extremely limited and delivers a poor UX.

It is perhaps, the inevitable result of the banks being forced by the Competitions and Markets Authority to do something many of them are reluctant to do - surrender the consumer to others (although HSBC just broke cover with plans for an OB based service) - and so we’ve ended up with a very watered down “compromise” API.

To my knowledge (I met the OB team) the second API (the ability to drive payments, the previous release was access to account information) will only support one off payments with a clunky UI that requires the customer to select their bank from a dropdown menu, then be redirected to online banking (not banking app) to login.

If that’s right, that means you’ve got the cumbersome two-factor authentication of online banking rather than slick biometric mobile app authentication, between you and every payment via a third party. And also one off payment isn’t suitable for a lot of applications - account on file re-billing, ecommerce billing upon shipment etc.

Kudos to Starling for investing in an open API strategy independently and therefore being a leader, not a “lowest common denominator” Open Banking follower!


#7

I get the impression that you ‘in the know’ guys @rob2775 and @JustJoliver are really quite excited about all this?! And that excitement is infectious - I can’t wait to see what happens either.

I would like to think the other banks aspire to something more akin to what Starling are doing, rather than dumbing things down and doing as little as they can possibly get away with while arguing they’re following the rules of the regulations. But that it probably just wishful thinking!


#8

For some context:

  1. I work for one of the “big four” (big, but not clever)
  2. I went main-bank with Starling last month
  3. I’ve tried to apply for jobs with Starling (there’s nothing that fits my skillset (yet)
  4. I went main-bank because I know they’ll be ahead of the game

We are definitely trying to be a bank with a more Starling-like approach, but there are two issues we are facing:

  1. A massive digital divide between the senior management who understand the technological investment required and the people who are smart and agile enough to deliver it
  2. A set of legacy infrastructures that nobody is brave enough to kill and start again with modern tech platforms

I could go into loads of detail on this but I for one am excited because I think that the Starling model will win in the end against the slow movers. Good intentions do not equal good capability.


#9

I’m certain of it. There’s an event called Finovate which started in the US and now takes place annually in London too. About 50+ European Fintech startups each get 7 minutes to pitch their business. It’s quite enthralling.

There’s a strong bias to building things that banks can adopt because banks can’t build things quickly and also write the biggest cheques (hell, they print the cheque books!) so startups that want funding know their audience.

As a result, the audience is a who’s who of folks from digital banking management of all the big UK and European banks. Why am I telling you this? Because I think of the show like the bow wave of an approaching ship:

The trends among Finovate pitches 3 years ago are the plays of today. And back then, many startups were pitching to banks a) shamelessly ripped off “app store” marketplaces for financial products and b) personal finance dashboards.

Bingo! And Starling is definitely a little out in front of this ship…

@JustJoliver - great insight. Presumably there is a 3. for your list of issues which is that even if all other stars aligned to support a new feature, there is a backlog of GDPR, ring fencing, PSD2 systems changes which HAVE to be done first?


#10

haha don’t you know it!

Our mobile app roadmap is now FULL until the end of 2018. How anyone can expect an organisation to respond in an agile fashion to anything new is beyond me.

We’re trying, but there have been so many missed opportunities to connect the dots.