KuppingerCole Report
By Richard Hill

Overcoming PSD2 Challenges with Onegini Connect

Many changes are coming to Europe's financial landscape due to the Revised Payment Service Directive (PSD2). PSD2 will present new challenges to overcome, as well as potential benefits for Third Party Providers (TPPs) and consumers. Account Information Service Providers (AISP) and Payment Initiation Service Providers (PISP) functions have historically been performed by banks; competition in the financial sector will emerge from non-traditional, non-banking types of businesses. Onegini Connect provides the foundational technical capabilities needed to meet the PSD2 challenges while giving banks and TPPs an edge.

Content of Figures

  1. Figure 1

Commissioned by Onegini

1 Executive Summary

In the European Union, the Revised Payment Services Directive (PSD2) will radically alter the financial services landscape. It has already begun to c ...

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2 Highlights

  • EU PSD2 took effect in January 2018. The Regulatory Technical Specifications (RTS) govern the implementation of Strong Customer Authentication (SCA ...
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3 PSD2 background and Regulatory Technical Specifications

PSD2 will revolutionize payments and financial services across the EU. PSD2 aims to foster competition in the financial sector, increase transactional ...

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3.1 Background and goals of PSD2

The original PSD helped establish the Single Euro Payments Area (SEPA), facilitated cross-border payments, cut fees and increased choices for consumer ...

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3.2 Strong Customer Authentication

Clients of financial services must use strong authentication methods to access financial resources. As written, PSD2 defines strong authentication in ...

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3.3 Secure Communications

Banks and other account holding institutions must expose APIs for TPPs (AISP and PISP) to utilize. AISPs will need to read account information from m ...

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3.4 Market changes and risks

Banks will still hold money and make loans, but new companies are emerging to handle account aggregation and payment management. While banks will sti ...

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4 Technical capabilities for PSD2 RTS architecture

Complying with PSD2’s regulatory technical specifications almost certainly means building new capabilities, functions, and features. Correspondingly ...

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4.1 CIAM

In order to offer SCA, an Identity and Access Management (IAM) solution is needed. Traditional IAM systems are designed to provision, authenticate, au ...

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4.2 SCA

Many CIAM and IAM solutions on the market today support the concept of SCA. Companies that have to comply with PSD2’s SCA provisions must decide whe ...

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4.3 Transactional Risk Analysis

PSD2 states that banks and/or TPPs can obviate the need to elicit an SCA event for every transaction if transactional risk analysis is performed inste ...

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5 What you need from CIAM solutions for PSD2 compliance

In chapter 4 we see that, at a high level, banks and financial institutions need CIAM solutions with risk adaptive authentication mechanisms to achiev ...

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6 The Onegini Connect Approach to PSD2

Onegini Connect is a PSD2 ready platform that provides both Consumer Identity Management and Mobile Security capabilities; supporting on-premises or i ...

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6.1 Strong Authentication

One of the key PSD2 requirements for TPPs is to ensure strong authentication for their customers, as noted above. Onegini Connect platform provides a ...

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6.2 Mobile Application SDKs

Using a PSD2 ready security platform adds value through speed in development by allowing the TPP to focus on its customer needs while Onegini provides ...

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6.3 User Experience

A good user experience is critical to financial customers and bad user experiences can drive customers to competing solutions. A goal in creating a gr ...

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6.4 Fraud Detection and Monitoring

Know Your Customer (KYC) and Anti-Money Laundering (AML) initiatives, particularly in the financial and insurance sectors, are business drivers motiva ...

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6.5 TPP Customer Case Study: Bizcuit

Bizcuit is an app that helps SME businesses to go fully digital. Business users can perform many of their daily tasks in the app, while backend system ...

Bizcuit already offers the ability to pay outstanding invoices directly from the administration with various banks. This solution is unique in The Net ...

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7 Summary and Recommendations

PSD2 is fast approaching, and the RTS will require major technology insertions for many banks and TPPs. IAM/CIAM infrastructure may need to be upgrade ...

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