Survey reveals PSD paradox

From banking technology.

Nearly 80 per cent of respondents to a joint Sibos Daily News and BT survey believe the Payment Services Directive (PSD) is a major change for their institutions. Despite this, only just over half (53 per cent) have read the PSD document. "It is frustrating that only half of the respondents have read the PSD document, when it has been in circulation for nine months, and the PSD comes into force in November next year," said Chris Pickles, head of marketing, investment banking and global accounts, BT Global Services. "I don't understand why respondents would identify the PSD as a major change for their institution but have not yet bothered to read the document."

When asked on which initiative they were spending more time - the single euro payments area (Sepa) or the PSD, 79.4 per cent of respondents said Sepa. Again, Pickles said this revealed a paradox: "Sepa is still getting the majority of attention, but the respondents feel the PSD will represent a major change. Sepa is a banking initiative and has no legal standing. There are no mandated deadlines for Sepa, unlike the PSD."

Since the introduction of Sepa credit transfers in January this year, the banking industry has been told Sepa will add value to their business. At the launch, the European Commission (EC) stated that Sepa would provide banks with opportunities to "develop innovative products, enter new markets and win new customers as well as increase the efficiency of back office processes". When asked whether Sepa would enable their organisations to add value to payments or transaction services businesses, 53.6 per cent of our survey respondents said yes, but 46.4 per cent said no. "Most banks have not made clear why Sepa represents added value," said Pickles.

Sixty-one per cent of respondents view the PSD as a compliance problem, rather than a business opportunity. Pickles draws parallels here with another EC initiative, the Markets in Financial Instruments Directive (Mifid). "The attitude towards Mifid at the start was very much that it was a compliance problem, but it has proved to be a business opportunity for a number of players. The multilateral trading facilities created by Mifid, such as Turquoise and Chi-x are challenging the incumbent exchanges. The same may well happen with the payment institutions that will be created under the PSD. Payment institutions should open up competition in the payments space because the existing competition is not adequate today."