PSD2 is the new European directive that aims to create a single payment framework within the European Union, but it is a regulation that affects far more than payments. The directive allows third parties to access banking client information. Enforcement of the directive may mean that traditional banks lose a “monopoly” on their customer. If banks cannot meet these new ‘digital demands’ users may be forced to look for alternative third parties (Fintechs) to manage their payments and finances.
According to the report “Six Steps to PSD2 — Digital Banking Reimagined in Europe and Beyond”, published by Gartner in July 2017, the winners will be those who can distill the entire financial relationship down to a single dashboard. Banks must encourage their customers to aggregate their account data from other financial institutions to their banking application. In this way banks become “customer data experts” rather than simply data custodians.
The challenge for banks is in providing analytical tools for customers to interact in a self-service mode. However, as Gartner highlights, financials are not always so clear, so the analyst recommends banks “make it intuitive for customers to engage with the bank when they need help or advice”.
Self-service is extremely important nowadays but, when we talk about money, human interaction becomes vital and critical to success. Banks must offer support and advice, and this is when collaboration tools make the difference. Banks can bring the human touch to online customer interactions by allowing the adviser and customer to simultaneously engage and collaborate around their banking web applications.
Traditional banks have to lead the change
Technology is important when building applications /aggregation solutions, but it is not the only thing that counts.If it were, then companies like Amazon, Google or PayPal would lead the change and banks could do little to compete. Technology giants cannot be matched in the fields of data analysis, artificial intelligence or automation. They have the capability to build high-class products, but they do not have experience providing personal financial advice.
Self-service, data aggregation, and analytics are capabilities banks can provide – developed either by themselves, by acquisitions, or by partnering with a Fintech – but when humans are making decisions about their money, their future, they want to talk to a professional adviser. If banks want to continue to engage with their customers, they must establish new online mechanisms that will add value along the way. Great support and advice mean more assets and transactions in the long term.
Post-PSD2, consumers will have a lot of options when they search for tools to manage their financials. Nevertheless, banks are likely to be the first option for most consumers. If banks mismanage this advantage, they may lose their “monopoly” on current customer data. And if banks do not address real consumer needs, customers will look for alternatives to manage their payments and finances through third parties.