Following the EU’s adoption of its revised Payment Services Directive (PSD2), an industry player has said it will cause “the collapse of the traditional banking infrastructure.”
PSD2, which allows third-party companies to offer banking services to consumers, could eventually transform banking in 67 countries worldwide through a ripple effect.
Speaking to South African tech publication Gadget, Thomas Pays, CEO of i-Pay, a startup set to benefit from the legislation, said 2017 would be a watershed moment.
“You are actually looking at the collapse of the traditional banking infrastructure and a rebirth of banking as we know it,” he stated.
PSD2 ‘will shock the market’
It is no secret that the current banking monopoly is both expensive and inefficient for all parties involved. The EU adopted a competitive approach this year with PSD2, allowing alternative offerings from third parties like i-Pay, which will reduce costs and make the environment “stronger and more robust,” Pays said.
In addition, the move is set to prevent banks from withholding account information from FinTech companies and strangling competition.
“PSD2 is taking online banking infrastructure and gearing it towards an environment which is stronger and more robust – much more so than the current method of buying online with credit cards,” he added.
“PSD2 is going to shock the market not just on a technological level, but also with time through the innovation it will drive.”
Consumers’ Blockchain bypass
In terms of innovation, however, it is hard to ignore the leapfrog effect being witnessed already through the use of Bitcoin-based alternatives to traditional fiat payments.
Dedicated Bitcoin remittance services already operate worldwide, some taking care of the entire process so that users are not even required to directly deal with currency exchange.
The launch of the year in 2016 was Stellar’s ‘SWIFT-like’ global remittances tool, which removes intermediaries to complete near instant cross-border transactions on the Blockchain. Not only that but, like Bitcoin, those shut out of the banking system are just as empowered to transact as millionaires or even banks themselves.
“One of the most important applications that are generally highlighted about Blockchain technology is its potential to bring financial services to the underbanked,” CEO Jed McCaleb told Cointelegraph earlier this month.