In less than 300 days, EU member states need to have implemented the Revised Payment Services Directive (PSD2) into their legislation. Change in the financial industry is evident.In less than 300 days, EU member states need to have implemented the Revised Payment Services Directive (PSD2) into their legislation. The aim of PSD2 is to open up the financial market for competition, to provide modern, cost-effective, and innovative payment solutions without compromising security. The official date is January 13th, 2018. Meanwhile, the European Banking Authority (EBA) is developing the Regulatory Technical Standards (RTS) to support the achievement of the objectives of the directive.
Change in the financial industry is evident, and I believe it is taking place in front of our eyes as we speak. Just take a glance at consultancy white papers and you notice they echo the same message. According to Pitchbook, global investments in Fintech since 2010 have exceeded USD 130 billion. The whole “open banking movement” is permanently changing how we as consumers experience our banks, and PSD2 is one important piece in that puzzle. We like the new services and finance apps such as MobilePay, Tink, and Pivo that change the way we buy and pay in our personal lives. And whatever we as consumers demand and receive, we want to experience in our corporate lives, too.
Imagine real-time visibility to your corporate bank accounts. But don’t stop there. What if you could have your own personal assistant to optimize your cash flow or tirelessly hunt fraud patterns? That assistant will be machine learning. Those of us who work with Treasury also know how cumbersome it can be too open and close bank accounts or to work with bank agreements, formats, channels, and all that. Too often, basics take all the time away from analysis and supporting business. PSD2 and open banking is an opportunity for both banks and suppliers to address all these challenges in a new and innovative way.
Going forward, purchasing and cash management will become a more closed loop, and this change is being accelerated by open banking. It will be just like what happens when we, as consumers, buy something. Purchases can be verified and automated through easy-to-use catalog solutions, and then paid for and financed according to predefined rules. The whole workflow is executed as an automated, touchless process, to great extent.
‘Cash is king’ is an old phrase, yet still so true. Time saved in the purchase-to-pay process or operational cash management not only delivers operational savings. Digitalization and automation also help to shift the Treasury’s role toward being more strategic. Cash flows carry knowledge and are therefore an asset for boosting a company’s strategy execution. Cash management can be harnessed to advise and help reach the company’s goals. We call this proactive cash management.