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PSD2: Where Customers Call the Shots

Change, in all its forms, brings with it concern and unrest, but also huge opportunity.

Particularly when change is imposed, it is often hard to see beyond the regulations and embrace the possibilities.  Banking, having experienced relatively little change in recent times, is now on the cusp of considerable transformation in the shape of PSD2, or the Revised Payment Service Directive.

Like it or not, with this legislation will come transparency the likes of which banks have never experienced, now forced to lower their portcullis to allow third parties cross the threshold and access protected customer information.  Why?  Because customer data after all, belongs to the customer, and as such the decision is theirs as to who sees it and who doesn’t.


The focus of banking, in fact, has oddly never really been on the user, but the move to consumer-centric services is well and truly underway.  Banks are playing catch up, but with this new all-attentive take on bank-customer interaction, there is much more benefit for the bank than at first meets the eye.  No more mortgages, loans and insurance as the sole source of earnings. 

Of course, banks will first have to deal with the security issues that will come from this third-party access, but PSD2 has covered all bases, with strict customer authentication requirements (SCA/ 2FA) in place to prevent security breaches and data leaks.  Once over the gruelling first hurdles, life can resume relative normality and even go one better.

A new banking scenario will allow FinTech companies and other third parties the ability to take on a new role as service provider, and banks will have equal access to this new opportunity for revenue generation.  Banks can become what is known as Extended Information Service Providers, or EISPs, using their superior customer insight to give them the upper hand and extend their business.

They can also become facilitators of customer account data such as transaction history and balance information (AISPs) and initiate payment services (PISPs), much in the same way that companies like PayPal currently do.

A bit of an “if you can’t beat them, join them” scenario.  Banking is becoming a two-way street and everyone stands to gain.

When will all this happen?  By January 2018, all players will need to have chosen what role they are going to play in this new setup, though change will be gradual.

No time to rest on your laurels, as to do this right is to plan well ahead.

 

 

 

 

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ABOUT THE AUTHOR

AOIFE CREAN

Aoife is an experienced copywriter and translator in English, Spanish and Catalan across several sectors.  Passionate about all things language-related and a whiz with words, she gives voice to the Strands values through all manner of articles, blog posts and whitepapers.

 

  

 

 

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Topics: Personal Financial Management (PFM), PFM, digital banking, PSD2, personalized finance, psd2 impact on banks

Author: Aoife Crean - Content Manager on Aug 3, 2017

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