Much has been written about the implications of PSD2, but we believe that some communication is not consistent with reality. One is that it is widely believed that PSD2 does not stimulate consumers to be loyal to their banks.
The digital transformation has led to the emergence of a number of challenger banks and e-money institutions (EMIs) offering financial products and services – particularly current accounts and payment cards. Most new players only offer access via digital channels and a more user-friendly experience than that that of traditional banks. So the newer players suggest that customers are leaving traditional banks to embrace their service offerings, which they promise will be wider and with more value-added in the future, ranging from personal loans to trading, provided their license allows it. Traditional players are investing heavily in digital processes to compete with newcomers and curb the migration of their customer base.
PSD2: customer migration?
Some suggest that the coming into force of PSD2 will stimulate customer migration to digital players. On the contrary we think that PSD2 will stimulate customer loyalty to their bank. In fact banks and fintech companies will enable customers to use their services without the customer having to switch bank. The customer will only need to provide explicit consent for his account information to be accessed by third-party service providers.
For instance, a fintech – or a bank – may offer a financial information aggregation service and allow their customers to view information from multiple accounts through a single interface. Thus, the customer will not feel the need to change banks to use services offered by other providers, as he or she can access them while maintaining the existing relationship with their bank.
Opportunities for banks
However, banks unable or unwilling to offer a competitive range of services will soon be relegated to a safe role, which may not provide sufficient revenues to survive. As such we recommend banks – particularly if they are small – to develop a range of services that will continue to attract customers in the future and focus where they have specific/unique skills to attract one or more target customers both in the short and longer term.
The CleverAdvice Team