At NextGen Nordics 2024 in Stockholm, moderator Debi Bell Hoskings hosted an interactive panel discussion about new data and privacy regulations and sought input from the audience.
Speakers Agnija Gailane, product manager for open banking platforms at Nordea, and Piers Marais, global product lead for embedded cross-border solutions at Visa, spoke in the session titled: “Privacy and consumer duty – how to improve open banking with API. “Integration’.
Both panelists agreed, unlike the audience, that PSD3 would be a game changer, but also gave reasons why PSD3 would not be viewed as such, as PSD3 essentially amplifies the impact of PSD2. Marais highlighted how PSD3 will expand open banking and non-banking access to all payment systems important for the future. Gailane explained that PSD3 will bridge the gaps between PSD2 and open finance, but is groundbreaking as it will enable data sharing between companies.
Marais noted: “For PSD3, the first implementation dates are likely to be the end of 2025, possibly 2026. We’re talking about the next decade of development.” I think, definitely, if we put ourselves in that historical context and start thinking about what that landscape might look like, from an open banking to an open finance, possibly even an Open Data Journey; Maybe it’s a game changer.”
Marais said there is probably more discussion about data these days as younger people are more aware that they own their data. He explained that the narrative has changed over the last 5 to 10 years and will continue to change, with increased emphasis on innovative ways to segment data.
The audience was asked whether they see open finance as an opportunity or a threat (or nothing at all), and Marais said he sees it as an opportunity, particularly from a customer perspective, as it gives consumers more transparency about who is viewing their data and how they can stay informed about how their data is handled and managed.
Gailane agreed that open finance is an opportunity: “Open finance is not just the APIs and information exchange, it is actually the entire operating model, not just for banks but also for fintechs.” It includes all the maintenance, the monitoring support, communication and more. We see how fintechs have all built their business models like aggregators based on PSD2, so we spent a lot of money building this entire ecosystem management infrastructure. Now we know how to do things, what it is; We don’t have to guess how to communicate and recognize each other. Now we can work hard to see what we can offer our customers.”
She emphasized that open finance is definitely an opportunity as it spans the entire ecosystem and leads to greater understanding, innovation and collaboration.
The panelists drew a conclusion on the impactful changes of PSD3 and PSR. Marais explained that PSR will lead to a reduction in variation in interoperability and standardization, and PSD3 will fundamentally change non-bank access to payment systems and open the competitive landscape.
How will the regulation of future technologies be implemented?
In the panel discussion “Risk and Resilience – Can We Really Regulate the Technology of the Future?”, payment experts discussed regulatory efforts to mitigate risks and cyber threats. Reporter Debi Bell Hoskings moderated the session with speakers Krister Billing, Market Infrastructures and Regulatory Affairs at SEB, and Marcus Molleskov, Chief Risk and Compliance Officer at January.
Billing noted the regulatory overload, and Molleskov agreed that there will be a tremendous amount of regulation in the next few years that will be difficult to navigate. When asked about the possibility of using AI models to support compliance, Billing expressed his excitement about the potential of AI, but emphasized that there are limits to its implementation in traditional banking structures due to privacy and security concerns and that this is with Migration in the AI sector is associated with many complexities. Molleskov noted that the use of AI models and third-party providers with integrated AI could make managing data regulations more efficient.
When asked whether regulation encourages or hinders innovation, Molleskov explained that in his opinion regulation hinders rather than promotes innovation. Billing is more divided, saying that this is a bit of both, namely that regulation enables rather than encourages innovation:
“I think promoting innovation as a concept is quite provocative. It is not the job of the regulator to encourage innovation. If you want to be very innovative internally, you can’t say you’re going to innovate on Fridays! We don’t do it that way in banks these days. It’s more about creating a good framework to create the basis for free innovation in the industry.”
Molleskov said anything can be regulated, but regulation should be reactive rather than proactive – and that should be the mindset with biometrics.
Billing explained that regulators also have intentions that are reflected in the proposed regulation, pointing out the differences between Europe and the US:
“The US and Europe have taken different approaches, in the AI race for example I think we lost the race on the infrastructure side. We have the opportunity to innovate with what we have, but we should recognize that regulators have different motives. Sometimes the motives pursue different goals that can contradict each other. Some of the initiatives pushed by the EU try to fend off Big Tech from the US. We have seen through the flood of digital legislation; the DATA Act, the Digital Services Act, Market Acts, but horizontal new laws are partly aimed at fending off the threat of Big Tech. This is more geopolitical in nature and therefore has different financial dimensions.”
Speaking about how regulation is implemented across various industries, Molleskov explained that crypto is not regulated at the same level as banking: “I am very committed to stricter regulation and greater accountability of Big Tech for fraud, Because one of the main complaints I hear from banks about why they don’t want anything to do with crypto is about the fraud risk and the AML risk.
Recently, Revolut released a report saying that two-thirds of their fraud detections were due to ads on meta platforms, and yet it is the banks and financial institutions that are subject to regulation.”
Looking at the positive aspects of the industry for closing statements, Billing pointed to the collaborative aspect of regulation with authorities and other industries that strengthens resilience, and Molleskov expressed optimism about the new AML regulations in the upcoming MiCA regulation will impact the crypto space.