The combination of CESOP, PSD3 and the PSR, has put businesses under new pressures. In this engaging article, André Casterman, Senior Advisor at Intix provides invaluable guidance on how companies can stay ahead of the curve.

The regulatory landscape in Europe is undergoing a serious makeover. Between the introduction of CESOP and the planned rollout of PSD3 and the PSR, financial institutions must devote renewed focus to address compliance issues. However, against the backdrop of broader business pressures and the continued fallout from lingering economic uncertainty, it’s perceived as a challenging task by many.

This attitude is understandable. Amidst a sea change of European regulations, financial institutions are quickly discovering that traditional compliance methods may no longer be sufficient for their needs. In particular, the data reporting requirements of regulations like CESOP and PSD3 have rendered many traditional systems obsolete. Moving forward, the need to meticulously source and comprehend financial transaction data is now paramount.

WHAT’S CHANGING?

As highlighted, the introduction of new regulations like CESOP and PSD3 underscores the growing importance of effective transaction data management. CESOP’s impact is already significant in the European financial sector. This regulation mandates that EU payment service providers, including banks and other financial institutions, record, and report data on cross-border transactions.

Although PSD3 is not expected to be enforced for another year or so, its anticipated impact on financial services is predicted to surpass that of CESOP. This upcoming framework, an update to the existing PSD2, will introduce new regulations for authorizing and supervising non-bank payment service providers (PSPs). While Europe is at the forefront of these changes, similar adaptations are being made in other regions, such as APAC.

Adapting to these shifts will demand diverse approaches from different companies. However, it is advisable for businesses to invest in technologies that facilitate rapid access to and visibility of transactions, without disrupting internal processes. In essence, the requirement for detailed sourcing and understanding of financial transaction data has now attained an unparalleled level of significance.

OPPORTUNITY IN CHALLENGE

Fortunately, there is no cause for alarm for those currently unprepared to face this situation. Although the introduction of new regulations inevitably presents issues, it also offers businesses a chance to refine their internal processes for better alignment with modern demands. This is particularly true for the businesses struggling to adapt their data management practices to comply with regulations, like CESOP and PSD3.

By shining a light on these issues, the new measures are illuminating a long-standing issue among financial institutions: outdated and ineffective data management practices. Ultimately, the introduction of these regulations is now helping to accelerate long overdue improvements across the sector. As such, their implementation should be seen by companies as more of an opportunity than a challenge.

THE ROLE OF DATA MANAGEMENT IN COMPLIANCE

Businesses across the financial sector must finally unlock the power of data within their compliance endeavours. Solutions are now readily available that enable companies to deliver more and faster information on transactions. By leveraging these enhanced capabilities, businesses can meet the requirements of the new regulations, while simultaneously future proofing themselves for further changes down the line.

Whether its banks being encouraged to explore new avenues to enrich customer experiences through PSD3, or the need for payment service providers to record and report transactional data of cross-border payments as part of CESOP, companies now require innovative data management technologies that aid transparent reporting and enable greater accountability across financial transactions.

DEVELOPING A PLAN THAT WORKS

To this end, companies increasingly need solutions that can break down organisational and technical silos, which typically exist within financial institutions to provide a complete picture across a myriad of data. In this pursuit, real-time access to messaging data can be used to enable high performance search, access, reporting and dashboarding. This approach makes search and visibility far easier, which is crucial.

Alongside this, businesses need data management solutions that can track transactions at any point in the processing flow, allowing for instant status updates. This is important as reconciling and delivering notifications on any part of the lifecycle flow helps to create maximum visibility and control over end-to-end operations. In doing so, these systems help to identify and prevent operational bottlenecks in a more time efficient manner.

Similarly, solutions of this nature can help companies to identify fraud incidents at an early stage and will often raise alerts around suspicious incidents immediately so preventive measures can be taken to mitigate financial and reputational loss. When assessing systems of this nature, look for solutions that can be configured to rules of your choosing and then automated as this will limit the need for time intensive human oversight.

KNOW YOUR TRANSACTIONS INSIDE OUT

Perhaps most importantly, businesses looking to respond to the updates to PSD3 and CESOP must ensure they’re onboarding data management solutions that can provide contextual and holistic insights on transactions, to support compliance professionals should an investigation be required. Systems that collect, correlate, analyse, model and report data sets to produce the needed insights and forensics must be a priority here.

That’s because investigators often struggle to properly analyse client payments as correlating data sets across dozens of systems is very complex and impossible to perform manually. The onus is now on companies to utilise solutions that enable a 360° view on a transaction by combining all events. In this endeavour, every piece of data really counts, so it’s essential companies know they’re collecting and analysing everything.

STEP IN THE RIGHT DIRECTION

By following this advice, and onboarding solutions that can effectively trace, trail, and know transactions, companies can turn reams of data into actionable insights for operational excellence, compliance, and audit. In doing so, businesses can put themselves in position to comply with the new requirements to PSD3 and the introduction of CESOP, while generating important new efficiencies in the process.

At Intix, we’re here to help those ready to embark on this important journey. In the past, achieving the level of data management performance mentioned in this article would have been virtually impossible, but providers, such as us are now able to handle the task with relative ease. From fixing friction in the transaction flow, to delivering real-time, efficient, and contextual data insights, we’re on hand to help businesses remain compliant.

For more information about Intix, please visit: www.intix.eu

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