The impact of PSD2 directive on the financial services industry

Abstract

The revised Payment Services Directive (PSD2) modernizes European payment services and aims to foster innovation in the financial services industry. The directive brings two major changes: (1) the introduction of third-party payment service providers and (2) the requirement to use strong customer authentication for the initiation and processing of electronic payments. This thesis focuses on the first change, the introduction of third-party payment service providers, and researches its impact on traditional banks and Fintech companies. This thesis includes a literature review and empirical data from two interviews.

This thesis found out that the changes PSD2 bring increase competition in the financial services industry, which is a positive thing for the consumers. The directive creates new challenges for banks and new opportunities for Fintech companies. Traditional banks and Fintech companies should develop new solutions together as they both benefit from it. Banks should also develop their services further and look for completely new ventures in other industries.