psd2 : will it be a game - changer? speech by job swank, executive director of de nederlandsche bank at esb ’ s conversation with regulators on innovation in payment services, 18 january 2018 in the hague 1. introduction • ladies and gentlemen, i ’ m grateful to the organizers of this conference for inviting me here. this conversation with regulators is the last in a series of events on innovation in payment services, organized by esb. for those of you who can read dutch, i highly recommend the dossier innovatie in betalen, issued by esb in september. it has much more to offer than you will hear from me today. • today ’ s topic is psd2. psd2 is a european directive, to be implemented through national legislation. and psd2 is about payments. to most people, these topics – legislation and payments – are extremely boring, a necessary evil. probably not to you. otherwise, you wouldn ’ t be here, but you are certainly a minority. • but life will change for the better, at least according to innovators, fintechs and other market suppliers. customers can be disencumbered from the tedious activity of making a payment. they may enter a shop or webshop, pick whatever they want and have the shopkeeper take care of the payment … which will be the end of civilization as we know it. or perhaps even more sophisticated : refrigerators, printers and other home appliances can order their own refill … and arrange for the payment without intervention of the consumer. a bank customer may receive an offer from a mortgage broker, perfectly geared toward her financial position and spending pattern … before she even considers buying a house. • this is not the future, this is now. those services – if that ’ s the proper term to use – are technologically feasible and supplied as we speak. so, the question is not whether or when we will enter into a new era ( we already have ), but rather on what scale. this very much depends on the receptiveness of the public at large and on the reactions of regulators and supervisors to the new possibilities. • psd2 is the response of the regulators. it is a response that facilitates innovation. it compels banks, payment institutions and other players to prepare for an era in which financial services are mainly delivered through smartphones, tablets and other electronic devices. • dnb welcomes psd2 and

banks prosper to the extent that they can exploit the new opportunities that psd2 offers. supervisors and central banks will have to monitor these new risks and developments, both for individual banks and from a system perspective. this is not something new. but the playing field may become in a constant state of flux over the next decade, posing new challenges to the authorities. • as a central bank, dnb welcomes psd2 and the associated innovations. by increasing competition, psd2 can make the payment system more efficient. there are at least three unresolved issues, though, which will come to the fore sooner or later. first, banks are expected to maintain the infrastructure for payments, which the new players can access for free. then, the strategic question arises whether there will be sufficient incentives for banks to invest further in the infrastructure. second, the payment system as a whole may become more complex and more fragmented, due to a lack of standards. is this a problem that needs intervention by the competent authorities or can it be solved by the industry itself? it may serve as a warning here that, until now, european stakeholders have not been able to develop a standard interface for access to bank accounts. third, if bigtech penetrates into the european market, who should organize the countervailing power to prevent market dominance. and how could this be done? 4. concluding remarks • let me conclude. psd2 compels the payment industry to head for a new digital era. this may have major strategic consequences for online payments. in my address, i have raised a series of questions on privacy, on the potential role of bigtech and on the conceivable prospect of a fragmented payment system. while dnb welcomes psd2, these questions deserve ample further reflection in the coming years. • i thank you for your attention.