Building PSD2 compliant APIs

Banks get exempted from providing PSD2 fallback channel with Salt Edge’s solution.

„Salt Edge, a leader in developing open banking solutions, helps banks and eWallets become PSD2 compliant in no time and get exempted by the national regulator from providing a fallback channel.”, company says in a blog.

Open banking creates new rules on what banks can do with the data they hold. Following the PSD2 requirements, European banks build and open their APIs to third party providers (TPPs). They also need to provide a contingency mechanism that TPPs can use in case the API does not work as expected. Yet, banks with properly developed and implemented APIs can get an exemption from providing such a mechanism, upon permission from the national regulator (Article 33(6) from RTS).

There are several factors that the national regulator takes into account when analysing the API’s quality such as user experience, availability, security and service provisioning. The bank should guarantee high API availability and performance, including out of hours API support, monitoring and maintenance; provide daily statistics and the results of stress tests; describe the authentication procedures supported by the API and prove that they do not create any obstacles for provisioning third party services. Banks should allow their customers to connect their accounts to third party applications for account information and payment initiation. Meeting these and many other requirements, and communicating with the regulator takes time and a lot of resources. However, this is a task that can be achieved as proved by GTBank, a client of Salt Edge, that obtained the exemption upon evidence of high-quality API.

As Salt Edge is specialized in both consuming and building PSD2 compliant APIs, this experience helped in developing GTBank’s API to both be compliant with all regulatory requirements and serve TPPs in the best way. Upon 3 months of being successfully tested, GTBank got exempted by the UK’s FCA from providing a fallback channel. The exemption saves the bank significant investment and resources for creating a contingency mechanism. It was granted as a result of active communication and intensive collaborative approach between GTBank and Salt Edge.

“With Salt Edge’s solution any bank or eWallet can comply with the PSD2 regulation quickly and efficiently, including getting an exemption from providing a fallback channel. This means they can concentrate on differentiating themselves on the market with improved customer experience: opening doors for both AISPs and PISPs, and develop open banking products that assist in making better financial decisions.”, said Ilia Dragan, Head of PSD2 Compliance at Salt Edge.