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. Banks have a choice: simply comply (and be reduced to a backstage role), or explore and exploit the potential.
We already covered 4 things that will happen because of PSD2. But which innovation strategy should you choose as a bank in response to these?
1. Provide the best user experience (UX)
As personal and professional customers will be able to freely take their data with them, they will use it in any digital tool they see fit. Offering the best UX will become a crucial differentiator in the battle for the primary relationship.
If you want a digital product with a great UX, make sure it:
- starts with needs-to-solve and jobs-to-be-done
- follows (web or mobile operating systems) standards and best practices
- has overarching design systems to ensure consistent visual language and interactions
- is validated early and often, and take user feedback to heart
2. Launch new products and services
As banking itself becomes a commodity, offered by many different parties, it becomes crucial to provide new and empowering capabilities.
For example: move beyond providing just the payment in an e-commerce transaction, but offer single-sign-on (“check-in”), coupons and rewards, or why not a flat-fee delivery service?
Great new products or services aren’t just the result of a certain new technology.
But again: great new products and services aren’t just the result of
a certain new (technological) possibility. They solve an actual, unmet
or underserved need. Find the right abstraction level when thinking
about new products and services.
Let’s take the e-commerce example: people don’t need an easy check-out, or even a webshop. They need a last-minute birthday gift they had forgotten about. That underlying need is your North Star, the actual product is just a way to reach it.
3. Monetise the API economy
More than ever, the new ecosystem will contain many different parties, from financial institutions over retailers, to tech companies and publishers, etc.
In this new, connected reality, APIs are the channel for exchanging data. Banks need to look beyond PSD2 regulation, and see the full potential. APIs can become a source of revenue for banks. Likewise, they can be used by other parties to build better digital products for the bank’s own customers.
No matter the strategy behind it, successful banking-platforms have solid API management. APIs need to be easily found, understood, and used. They require healthy internal and external developer communities. Banks need to think about all of the different third parties that will engage with their data, and how they can facilitate or monetise those engagements.
Alternatively, they should seek out how they can enrich their products and services by using other organisations’ APIs.
4. Develop a data strategy
If the bank you work at doesn’t have a Chief Data Officer already, hire one as soon as possible. PSD2 will unlock many new data streams. The choice is yours: comply, or thrive. The latter means your data will need to be qualitative and well-handled. It means thinking about
- the commercial value of your data
- which data sharing partnerships could be established
- how to valorise those partnerships.
- ethics and privacy
In short, you want experts on this.
For now, banks still have the established advantage of already possessing the data many new entrants will be after. Use it to your advantage.