Articles From the Team

Burn the banks, it’s time for PSD2!

It feels like BREXIT and GDPR have drowned out some significant regulatory changes which are going to fundamentally change the way that banking occurs. A much smarter man than I said “Banking is necessary but banks are not”. I`m starting to come around to his way of thinking (as all my friends know when I bore them to death about the future of cryptocurrency and Ripple/XRP in particular).

For those of you who are not aware of what PSD2 is then I think it is important that you understand the fundamental change. From 13th of January 2018, you may be using Facebook or Google to pay your bills, pay your debts to your friends, assess your spending, all whilst your actual money remains stored within your bank account. This is because Banks will be obligated to give third-party providers access to their customers’ accounts through APIs (application program interface).

Sound complicated? That’s because it is, there are so many regulations that lawyers will be desperately needed to pick through the PSD2, GDPR, BREXIT & Cryptocurrency regulatory minefield. It’s a 4D puzzle in which 2D/3D/uninformed businesses will die.

I feel we are on the verge of a complete financial and banking transformation, the opportunities are seemingly unlimited. For example via Ripple and XRP I can send money in 4 seconds to friends in Japan, whilst incurring minimal transaction fees (thousandth of a pence). In the past it would have cost a small fortune and taken several days. Adaptation of this bold new frontier will be the deciding factor and certainly Forex or money exchange companies will have to revamp themselves rapidly in order to avoid the oncoming revolution, thank goodness those horrendous exchange rates at the Post Office will come to an end!

I`m not clever enough to understand what the whole strategic picture will mean but I do fancy getting my mortgage from Fujitsu acting as a Japanese payment services provider (the rates should be fantastic – current Japanese Central Bank rate is 0.1%). I`m certain that savvy lawyers operating within specialised fintech businesses will be able to exploit the opportunities to consumers that PSD2 provides, combined with intelligent use of advanced and genuine use-case cryptocurrencies like XRP.

Incidentally the quote at the beginning was Bill Gates in 1994, it has only taken me 23 years to catch up but I note that the Bill and Melinda Gates Foundation recently announced a partnership with Ripple to bring banking to the billions of people across the world who are not fortunate enough to have access to appropriate services – No banks required, will we miss them?

For more information contact Mike Huggins at BCL Legal.