PSD2, the Payment Services Directive mandate of the European Union (EU) enables business and consumer banking customers to use third-party providers to manage financial transactions. Furthermore, the regulation requires banks to provide these third-parties access to their customers accounts through open APIs PSD2, in fact, changes the very nature of banking when any of the participants — bank, customer, merchant, or third party — resides in Europe. The regulation also establishes different types of third parties, opening up new opportunities for enterprising service providers. The APIs that PSD2 delineates provide the mechanism that enables PSD2 to work — and for any company serving in any of the roles that PSD2 defines, managing those APIs is essential to the seamless operation of the services and the mitigation of inherent security and performance risks. On this webinar, digital transformation expert Jason Bloomberg, President of industry analyst firm Intellyx, will discuss the complexities of the API-enabled ecosystem that PSD2 creates and the many essential roles that API management must serve to ensure successful, secure financial transactions. Next, Fiorano Software CEO and CTO Atul Saini will explain the actual PSD2 functionality and will show how APIs (and to a lesser extent messaging) are used to implement PSD2. He will also show how Fiorano API Management provides the security, metering, monitoring, and management that all PSD2 participants require.

1. Jason Bloomberg Atul Saini
• A leading industry analyst and expert on agile architecture
• Advises on Digital transformation initiatives
• Popular books by Jason
- “The Agile Architecture Revolution”
- “Service Orient or Be Doomed! How Service Orientation
Will Change Your Business”
Speaker Introduction
• Founded Fiorano Software in 1995, Currently
CEO & CTO
• Been at the forefront of integration, SOA & peer-
to-peer distributed processing
• One of the first entrepreneurs to realize the
power of Microservices

2. PSD2: Open Banking
with APIs
Jason Bloomberg
President
jason@intellyx.com
@theebizwizard
Copyright © 2017, Intellyx, LLC

3. About Jason Bloomberg
• President of
industry analyst
firm Intellyx
• Latest
book The Agile
Architecture
Revolution
• Published the Agile Digital
Transformation Roadmap poster
Copyright © 2016, Intellyx, LLC3

4. What is PSD2?
• Payment Services Directive
(PSD)
– EU Directive, in force since
2007
– Regulates payment services
& providers in Europe
• PSD2
– Revises PSD, in the works
since 2013
– Better consumer protection & security
– Incorporates emerging payment methods
– Direct connection between merchants & banks via APIs
Copyright © 2016, Intellyx, LLC4
PhotoCredit:CharlesClegghttps://www.flickr.com/photos/glasgowamateur/

5. Global Impact
• PSD2 one of many examples
worldwide
• Modern payment mechanisms
must be global
– Smartphone-based payments
must work anywhere!
• Regulations mandate change
but require compliance with
safeguards
Copyright © 2016, Intellyx, LLC5
PhotoCredit:jasonWilsonhttps://www.flickr.com/photos/hive/

6. PSD2 Introduces & Regulates
Third Parties
• Third-party payment service
providers (TPPs)
– Payment Initiation Services
Providers (PISPs)
– Account Information Service
Providers (AISPs)
• New business opportunities
• More parties to integrate with
• TPPs will all be SaaS
Copyright © 2016, Intellyx, LLC6

7. Direct Connection via APIs?
• Transactions
between merchants
and banks have
always gone through
intermediaries
• With PSD2, retailers get permission from consumer,
interact directly with bank
– API support on both sides
– Raises bar on security
– Consumer permission essential to compliance
– Transactions in real-time, high performance, resilient
Copyright © 2016, Intellyx, LLC7
PhotoCredit:GarfieldAnderssenhttps://www.flickr.com/photos/78855484@N03/

8. A New World
• The old way:
– B2B financial transactions over highly
secure, closed networks
– Point-to-point, proprietary formats
• The new way:
– Open APIs
– RESTful, Internet-based interactions
– Modern security protocols
Copyright © 2016, Intellyx, LLC8
Regulators Expect APIs to work
& be fully secure

9. Compliance Still Paramount
• Never forget, PSD2 is a set of
regulations
– Compliance is mandatory
– Compliance must be verifiable
– If you experience a breach, you
are out of compliance
Copyright © 2016, Intellyx, LLC9
Blaming the Hackers Isn’t
Good Enough!
PhotoCredit:TnarikInnaelhttps://www.flickr.com/photos/tnarik/

10. Every Interaction Must Be Secure
& Verifiable
Copyright © 2016, Intellyx, LLC10
AISP
Customer’s
Bank
MerchantPISP
Merchant
Web Site
Merchant’s
Bank
Merchant
Mobile
Back End
Customer

11. Jason Bloomberg
President, Intellyx
jason@intellyx.com
@theebizwizard
Download poster at AgileDigitalTransformation.com
Thank You!
Copyright © 2016, Intellyx, LLC

12. PSD2:Open Banking
withAPIs
Fiorano Webinar
Entire Contents © 2010-17, Fiorano Software Inc. All rights reserved
By:
Atul Saini
CEO & CTO
Fiorano Software Inc.

13. Technology
required for
PSD2
Compliance
APIs are the pivotal technology in the PSD2 regulation

14. Impact on
Banks
Before PSD2 Post PSD2
Banks need a secure gateway to expose customer account data and payment
processes to 3rd parties.

15. What Fiorano
can do for
Banks
Open up bank’s systems to provide
access to 3rd party players of PSD2
ecosystem
API
Exposure
Simplify the flow of transactions and
payments bypassing manual entry of
customer details
Streamline
Payments
Provide added services to customers
by wearing hats of PISP and AISP
Value
Added
Services

16. Fiorano PSD2
Interface
List of Banks
List of Beneficiaries

17. System
Architecture
 Banks need API Management
for interaction with PISP and
other banks
 PISP packages the transaction
information from the user and
sends it out to the banks
PISP
Bank 1 Bank 2 Bank 3
APIs APIs APIs

18. Key PSD2 Flow
(Step 1)
Customer
Beneficiary’s
Bank
The customer asks the PISP to transfer X
amount to a beneficiary
PISP
Customer’s
Bank
AISP
• Consumer consolidates all Bank accounts with PISP
• Transfers can be from any Bank account to any Beneficiary in a single
interface

19. Key PSD2 Flow
(Step 2)
Customer
Beneficiary’s
Bank
The customer asks the PISP to transfer X
amount to a beneficiary
PISP
Customer’s
Bank
AISP
• Secure, time-bound API tunnel created from PISP to Bank
• CryptographicTrace, with ISO messages
The PISP initiates the
payment from
customer bank to
beneficiary bank
<PIAN 1 message>
ISO20022

20. Key PSD2 Flow
(Step 2…)
Customer
Beneficiary’s
Bank
The customer asks the PISP to transfer X
amount to a beneficiary
PISP
Customer’s
Bank
AISP
• Before transfer, customer reviews Exchange rates,Transfer fees,Time-
guarantees, etc.
• Transaction can be reversed if consumer is not satisfied with
guarantees/rates
The PISP initiates the
payment from
customer bank to
beneficiary bank
<PIAN 1 message>
ISO20022
<PIAN 2 message>
ISO20022
- Exchange Rate
- Transfer Fee
- Time required
for payment

21. Key PSD2 Flow
(Step 3)
Customer
Beneficiary’s
Bank
The customer asks the PISP to transfer X
amount to a beneficiary
PISP
Customer’s
Bank
AISP
• For each transaction over a certain limit (35-45 Euro), the Bank performs a
2-factor authentication over a range of devices/methods (mobile phones,
email, etc.)
• Overall timebound for complete transaction maintained
<PIAN 2 message>
ISO20022
- Exchange Rate
- Transfer Fee
- Time required
for payment
2 Factor
Authentication

22. Key PSD2 Flow
(Step 4)
Customer
Beneficiary’s
Bank
The customer asks the PISP to transfer X
amount to a beneficiary
PISP
Customer’s
Bank
AISP
• After Bank executes transfer, confirmation sent to PISP via one-way
messaging
• PISP updates ‘front-office’ transaction record and maintains
cryptographic trace
<PIAN 2 message>
ISO20022
- Exchange Rate
- Transfer Fee
- Time required
for payment
2 Factor
Authentication
Post authentication the customer bank
transfers the amount to the beneficiary’s bank

23. Key PSD2 Flow
(Step 5)
Customer
The customer asks the PISP to transfer X
amount to a beneficiary
PISP
Customer’s
Bank
AISP
• Additional aknowledgements from Benefiary banks also recorded by both
PISP and AISP
2 Factor
Authentication
Post authentication the customer bank
transfers the amount to the beneficiary’s bank
<1 way asynchronous message>
Bank updates AISP & PISP with
payment acknowledgement <PIAN 2 message>
ISO20022
- Exchange Rate
- Transfer Fee
- Time required
for payment
Beneficiary’s
Bank

24. Fiorano PSD2
Solution:
Features
Secured API
connectivity
via 256 bit
encryption
Security
2 factor
authentication
via email and
mobile
Complete
view of
financial
accounts in
a single view
Transparency
End-to-end
visibility of
transaction
history
Out of the
box core
banking
integration
Interoperability
Fully
customizable
solution to
promote
innovation

25. PSD2
Requirements
 Single view of entire financial account status of an individual
 Complete financial transactional history for increased transparency
 Strong authentication mechanism that allows 2 factor authentication
 Enhanced security as confidential data is exposed to 3rd parties
 Sandbox for banks to start exploring new business models under
PSD2 compliance
 Complete control on APIs to provide restrictive and selective
permission access to different 3rd parties

26. Pre-requisites
Customer has already authorized PISP to initiate payment on
his behalf and the required information (includingSecurity
Tokens, etc.) is available with the customer’s bank for
verification
The Merchant has the requiredCustomer Credentials / Security
Token(s) (provided by Customer and Customer Bank during the
setup process) to initiate payment via PISP
Execution Flows (with PISP)
PSD2
Execution
Flows
(PISP)

27. Execution Flows (with PISP)
PSD2
Execution
Flows
(PISP)
Customer
Customer
Bank
Merchant/
Amazon
Step 1:
Customer places
order on merchant
website
Step 2:
Merchant contacts PISP which
has been authorized by
customer
Step 3:
PISP initiates the payment at
customer’s bank via a secure
Oauth connection
Step 4:
Customer Bank verifies
PISP’s request, debits
customer account and
wires money to Merchant
TransferWise
(PISP)
AISP
Step 5:
The Bank NotifiesAISP, PISP,
and Merchant via one-way
messages
Step 6:
AISP (optionally) sends
notification to Customer

28. Single Portal
for accessing
your banks
Banks Balance
Bank A $ 2500
Bank B $ 4500
Bank C $ 1000
Beneficiary Bank
ABC Bank A
XYZ Bank B
PQR Bank C
Step 1:
Customer chooses one of his
banks from PISP to transfer
money to a Beneficiary
$ 500
Transaction
Details
Amount Beneficiary
Customer
Accounts
Beneficiaries
Transaction
History

29. 2 Factor
Authentication
PISP
Step 2:
PISP contacts Bank A via API
Bank A
Customer
Step 3:
CustomerAuthorizes the
transaction via 2 factor
authentication
Bank C
Step 4:
Bank A completes the
transaction by transferring $500
to PQR’s account in Bank C

30. Transaction
History
&
Updated
Balance
Banks Balance
Bank A $ 2000
Bank B $ 4500
Bank C $ 1000
Beneficiary Bank
ABC Bank A
XYZ Bank B
PQR Bank C
Step 5:
Customer sees the updated
account status and transaction
history
Transaction
Details
Amount Beneficiary
Bank A to
Bank C
$ 500 PQR
Customer
Accounts
Beneficiaries
Transaction
History

31. The presentations are now concluded.
Please stand by for the Q&A session
Atul Saini
CEO & CTO
Fiorano Software Inc.
©Copyright FioranoSoftware, Inc, and its affiliates. Fiorano ESB, Fiorano Middleware Platform SOA, FioranoMQ,Fiorano JMS server and Fioranologo are trademarks or
registered trademarks of Fioranoand its affiliates. The data and information contained herein may not be reproduced, published or distributed to, or for, any third parties
without the express prior written consent of Fiorano. Products and names, if mentioned in the presentation are the property of their respective owners and the mention of
them does not constitute an endorsement by Fiorano.
www.fiorano.com
ThankYou
To find out more about Fiorano solutions, please visit www.fiorano.com
or Email us at sales@fiorano.com.

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