As from 2018, PSD2 will enable European bank customers to use third-party providers to manage their finances. This means new parties will be able to access account data or initiate payments on behalf of the (consenting) customer. Which important changes will we see?
1. Digital wallets & in-chat payments
PSD2 will make the banks’ monopoly on transaction data and payment services disappear. In the past few years, fintechs (like Moven or Simple) have already been building superior digital customer experiences on top of existing banking infrastructure.
regulate data access and exchange, allowing more new
entrants to come and play. Those new players aren’t just the
eager and agile start-ups. Expect tech giants and big retailers as well (Google, Apple, Facebook, Amazon). We're already seeing integrated digital wallets or payments in chats and news feeds.
Banks have the benefit of having an established, trusted and familiar relationship when it comes to their customers’ finances. Still, banks will have to step up their game in the user experience department.
They will have to rethink what banking means for their customers.
2. Centralised services for payments and interactions
Because of these new players and possibilities, we can expect financial services to become much more integrated into the bigger customer journey. Expect transactions to become a seamless part of much broader interactions. Think of booking a restaurant and immediately opening a tab for the transaction. Or imagine booking a flight with an Uber to the airport automatically included.
It goes beyond payments though. When buying property for example, you’ll use one centralised service that offers both financial and practical assistance. There are plenty of examples that prove how banking will move to the background.
3. The end of banks' exclusivity on data
Customers can authorise different parties to access the information on their accounts through regulated and secure APIs. This means they can use a checking account with Bank A and Bank B while making use of Bank C’s app.
Banks will have to rethink their position in the customer journey
Losing their primary relationships isn't the only future threat of banks. If Google or Facebook have taught us one thing it’s that data is the new gold. Very soon banks will have to give up their exclusivity on transaction data. Other platforms will be able to gather this info from different sources. Unified finance management tools like ING’s Yolt are just the beginning. Take Barclay’s SmartBusiness service for example where SME’s can benchmark their finances in comparison to similar companies.
Banks are privileged to access customer data, but they will have to think about how they can turn that data into insights. That’s where the real value lies.
4. New business models and unified services
Given the new possibilities and the changing customer mindset, banks will have to rethink their role. Let’s take a look at the utilities industry for example. In short, they are moving from ‘supplying power’ to ‘providing home services’ in general.
A small startup called June is trying to disrupt the entire industry. They will change suppliers on your behalf by collecting your usage data and comparing it with that of other users. They understand that finding the best gas or electricity deal for you is a necessary evil. This applies to your finances as well, so don't stop at simply gathering financial data in one unified tool. The goal should be to offer accurate advice, find deals, and even mediate on behalf of (opted-in) customers. This is just one example of how new services will pop-up in a "post-PSD2 world".