PSD3 call me

The new paper from the European banking industry, produced by the European Banking Federation (EBF), European Association of Co-operative Banks (EACB) and the European Savings and Retail Banking Group (ESBG) sets out the industry’s vision for the EU payments market in detail. There’s lots of interesting stuff in there, but I was particularly interested in their views on the regulatory environment.

I couldn’t help but notice this paragraph on page six…

“From a data privacy perspective, global BigTech’s existing data superiority combined with access to payments data should be concerning and could lead to unintended negative outcomes for EU citizens.”

This is not a new position. It’s been obvious to any serious surveyor of the European payments landscape that it has been tilted. This is what I wrote for Wired magazine back in 2017:

“Non-banks are about to get a huge boost from European and UK regulators, thanks to the European Commission’s Second Payment Services Directive (PSD2)”.

I’m hardly the only person to have realised that PSD2 would mean that the playing field is tilted against banks and in favour of Big Tech. In fact I gave a keynote address on this topic at PaymentsNZ a couple of year ago, so if you are interested in a more detailed explanation of why the current regulatory environment is unsatisfactory, put your feet up and watch this:

The question is what to do about it now. Fortunately, I wrote about this in some detail more than a year ago, so if the European banking industry needs some help in formulating specific policies to lobby the legislators for, I stand ready to point the way. Last year, following the Paris Fintech Forum where this topic was discussed, I commented on the suggestion from Ana Botin of Santander that organisations holding personal data ought to be subject to some regulation to give API access to the consumer data. Not only banks, but everyone else should provide open APIs for access to customer data with the customer’s permission. This is what the European banks are asking for in their vision document. They want “concrete support” from policy makers to help achieve their objectives, including this levelling of the playing field between banks and Big Tech competitors, brining in a mutually-beneficial approach to data sharing address the inherent asymmetry in the post-PSD2 environment.

So, yes, Open Banking. But open everything else as well. Particularly Open Bigtech. This sharing approach creates more of a level playing field by making it possible for banks to access the customer social graph but it would also encourage alternatives to services such as Instagram and Facebook to emerge. If I decide I like another chat service better than WhatApp but all of my friends are on WhatsApp, it will never get off the ground. On the other hand, if I can give it access to my WhatsApp contacts and messages then WhatsApp will have real competition.This is approach would not stop Facebook and Google and the other from storing my data but it would stop them from hoarding it to the exclusion of competitors.

Forcing organisations to make this data accessible via API would be an excellent way to obtain the level playing field that the European banks are calling for. This would  kill two birds with one stone, as we say in English: it would make it easier for competitors to the internet giants to emerge and might lead to a creative rebalancing of the relationship between the financial sector and the internet sector. So, if the European Union wants to begin thinking about PSD3, in my opinion it writes itself.

Not neutral

Emily Nagel, the CEO of Yankee Group, has a book called “Anywhere“. I happened to be reading this last week, and I came across the section on “I’m from the government and I’m here to help” in Chapter 11, “Anywhere Unknowns”. In it, she makes a good point about net neutrality and she says

…at Yankee Group our perspective is that legislating the ways in which the network capacity can or cannot be monetised by the networks’ owners is likely to stifle their efforts to find ways to monetise the constantly increasing traffic loading their networks.

This is absolutely spot on. It is perfectly reasonable for Virgin Media to charge me for QoS and GoS (Quality of Service and Grade of Service, as us old telecommunications hands still think of them). But it is not reasonable for them to charge me depending on what, or who, I am connected to. What’s more, it will never work. If Virgin (my ISP) wanted to charge me extra for looking at the BBC website or accessing BBC iPlayer rather than Virgin’s web site, then I would simply log on through an SSL VPN all the time, instead of only when I am overseas and want to telly, as I do now. I also use a US VPN when I want to watch “The Daily Show” sometimes. Once everyone has switched to encrypted VPNs, then none of the ISPs will know what anyone is connected to. Anyway, who would be against net neutrality?

In a speech entitled “The Open Internet” Communications Minister Ed Vaizey was said to have opened the floodgates for, say, Sky to provide a broadband service that prioritised its TV catch-up services and made those of the BBC practically unwatchable.

[From Ed Vaizey: ‘My overriding priority is an open internet’ – Telegraph]

I went along to the Houses of Parliament a few days ago at the invitation of Stephen McPartland MP and Alun Michael MP to hear Britain’s Communications supremo, Ed Vaizey, talk about this. The Hon. Edward Vaizey went to one of the most expensive private schools in the country (the same one as Nick Clegg) and is a barrister, and is therefore ideally suited to job of Parliamentary Under Secretary of State for Culture, Communications and Creative Industries. Hansard says that one of his specialist subjects is “light bulbs”. That was why I was looking forward to his speech. He said that:

  • The Government’s communications policy is going to attract high-tech industries to the UK. He never said how, and I was left puzzled as to how his views on net neutrality might support this contention.
  • There will be a digital single market… Broadband… inclusion… Consumer confidence…
  • We should develop “rights management system fit for a digital age” but he didn’t even allude to what this might be or what its requirements might be. I strongly suspect that he is not thinking of maximising the net welfare, but that’s a personal opinion.
  • Competition in telecoms is a good thing and national regulators should stand up to incumbents, something that I’m sure we’d all agree with, especially when those incumbents campaign against net neutrality (this is what BT mean by traffic management based on “types of expected usage“).

He mentioned something about IPv6 in passing, but I didn’t quite catch it. I may be wrong, but I shouldn’t think he knows what IPv6 actually is, so it probably doesn’t matter. He didn’t take questions and left immediately after his talk, but I’m sure we was able to ascertain many of the opinions of the assembled experts by some sort of osmosis as he brushed through the crowd to the exit. Incidentally, he also said “Britain is no longer an island”, which made me laugh out loud because it reminded of the old Not the Nine O’Clock News sketch where “Lord Carrington” says “Britain is not an island” and “Robin Day” cut him off with “Well I’m afraid it still is Peter”.

 

In the future, everyone will be famous for fifteen megabytes… [posted with ecto]