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How banks can benefit from the new PSD2 regulation
As we’ve seen from a recent report by PwC, more than two thirds of bankers believe that PSD2 will mean they lose control of their client interface.
Many bankers have already said they will be adopting a ‘wait-and-see’ approach, but that will leave them in the dark ages once the new rules come into force in 2018.
Banks who take a proactive approach to PSD2 will be able to steal a march on their competitors though.
Here are three key things for banks to bear in mind when they consider their approach to the new regulation.
1) Banks have an inbuilt advantage at the moment:
Banks already have an inbuilt advantage because they have a trusted relationship with their customers.
By creating their own financial oversight and management tools they, along with their customers, will be able to see their finances in one place, thereby enabling banks to offer more suitable products to their customers.
2) It’s not just about technology:
The buzzword around the financial sector might be ‘technology’, but it doesn’t stop there.
Those creating the strategies within the banks need to change their mindset.
They need to understand that including third party services is not a bad thing, and they must convince their customers that they are acting in their best interests.
3) Utilise a connections platform:
By utilising a connections platform to act as a bridge between their core banking system, there only needs to be one set of API’s from the system.
This platform will carry significant benefits, including a reduction in the amount of development required, an environment where security can be managed, and an ability to leave the current core systems undisturbed.
Additionally, the platform will quickly and easily integrate third party services, providing opportunities to sell more products to their customers.
Crucially though, the connections platform will also allow the bank to maintain control of the client interface and strengthen the customer relationship.
To add to the pain for banks, a survey of 1000 German consumers, carried out by PwC, found that almost 90 per cent already use third party digital payment services such as PayPal, and that over 80 per cent believe that companies like PayPal can handle transfers as reliably and safely as their banks.
Banks need to face the reality- the PSD2 regulation is coming into force. The only decision they have is whether they want to be the ones left on the sidelines.
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