Growth & Lending

PSD2 and Open Banking: Expanding the market for Credit Unions everywhere!

PSD2 and Open Banking has been predicted to be the biggest shake-up within the financial sector to date! From 2018, customers have been able to take control of their banking data, opening them up to better loans and credit cards, and helping them to make the right financial choices. For Credit Unions, PSD2 is more than a compliance exercise – it’s a springboard for innovation.

What is PSD2?

There are 3 key elements to PSD2:

  • Strong Customer Authentication (SCA)
  • Fraud Reporting
  • Open Banking


  • SCA and fraud reporting under PSD2 does apply to all Credit Unions in Ireland.
  • SCA and fraud reporting under PSD2 does not apply to all Credit Unions in the UK.
  • Open Banking is optional for Credit Unions in Ireland and in the UK.


From 14th September 2019, secure 2-factor authentication is a mandatory requirement for members to access their payment accounts online and to complete transactions e.g. when setting up a new beneficiary.

This authentication must include two of the following criteria:

  • Something you know e.g. username and password
  • Something you have e.g. mobile device
  • Something inherent to you e.g. fingerprint authentication

Meeting this challenge requires a clear strategy, operational and infrastructure changes, a clear focus on assessing and managing risks, and meticulous execution. In 2019 Credit Unions have an opportunity to work with technology partners to fully embrace PSD2 and see it as a real advantage for them and their members.

Fraud Reporting

PSD2 also requires an annual report on executed fraud (i.e. after the event of fraud), and this comes into effect on 30th September 2019. There are two different types of fraud:

  • Unauthorised payment transactions: these are payments made as a result of the loss, theft or misappropriation of sensitive payment data or a payment instrument. This may not always be detectable to the payer prior to a payment and whether or not it was caused by gross negligence from the payer or executed in the absence of consent by the payer. It is still deemed as fraudulent.
  • Manipulation of the payer: these payments are made as a result of the payer being manipulated by the fraudster to issue a payment order, or to give the instruction to do so to the payment service provider, in good faith, to a payment account it believes belongs to a legitimate payee.

Open Banking

At the end of 2018, KBC Bank Ireland enabled customers to add accounts from other banks to their banking app, allowing them to view the balance of all of their current accounts they hold with other financial institutions, from the one application. Already KBC Ireland are seeing a growth with 20,000 new customer accounts opened in three months, bringing the total number of new accounts added in 2018 to over 60,000 (BankingTech 2018).

As we mentioned previously, Open Banking is optional to Credit Unions. However it’s a huge innovative step to providing an even better service to your members.

Imagine if your members could see all of their financial accounts from their Credit Union online banking app, offering a holistic view of their finances and opening up your services to them. Open banking could make this possible!

For more information on PSD2, Open Banking and future technologies, download our eBook ‘The Future of FinTech in Irish Credit Unions’.