This is the third of three articles exploring how Banks and Fintechs should start preparing for PSD2 and the burgeoning technological wave that is set to shape their products in the short term.
Article two looked at the introduction of the European directive (PSD2).
In the previous article, we discussed Europe’s Payment Services Directive 2 (PSD2) and the implications that it has for the banking and finance industry.
PSD2 is coming, and financial institutions need to prepare to meet the new challenges.
There will be little choice in relation to complying with the directive and banks will need to prepare to start opening their data via APIs to the market.
However, taking a basic “compliance” approach risks rendering established banks as bit players in the new landscape.
Banks need to meet the challenge head-on by adapting their practice so that they can combine their in-house data with that of other providers in order to offer modern customers the financial insights they will come to expect.
Start planning for PSD2
Look at how to maximise the usefulness of in-house data. This is an exercise that will require breaking down internal silos in order to bring IT, business and marketing teams together to understand customer needs and the steps the organisation needs to take to address them.
Many institutions will have begun this process already as part of their digital transformation initiative, and it needs to continue with a tight focus on user needs in the digital-first environment.
Be aware that customers will enjoy a new level of transparency, and will be able to see with greater clarity than before whether they are getting the best deal from their day-to-day banking, loan and credit facilities. With banks relegated to potentially acting as simple custodians of their customer’s cash while next generation providers manage the communication with users, banks must ensure that they are competitive or they risk losing customers and market share.
All is not lost for the established players who are frequently household names in their home markets and who may enjoy a solid reputation with regard to their security and technological infrastructure. With their large customer bases already using their apps and banking portals, these institutions are well placed to thrive in the new environment, if they seize this transformative opportunity.
Sweat the details
Already we’re seeing a convergence among new Fintech companies with regard to the types of financial insights and services they are providing to clients.
Common features currently on offer may include:
- Personal spend reports
- Instant transfers to payees
- Clear information on fees
- Proactive alerts on upcoming debits
- Instant confirmation of spends and transactions
This creates an environment where tiny UX details are critical in the pursuit of market share. Banks and Fintechs will need to seek out features and functionality that are innovative and truly useful to their customers if they wish to gain traction in what will be a competitive space.
“Banks are used to providing their customers a great ‘rearview mirror’ perspective of what has already occurred. In the future, winning financial firms will provide a ‘GPS view’ of future needs and changes in financial position.”
Jim Marous, as interviewed by Arturo Pallardó of Kantox
Now is the time to begin exploring potential strategic approaches to PSD2. Start experimenting with prototypes that can be presented to customers to gauge their appetite for proposed new offerings. Let customers learn about what you might do, and use prototypes to gain insights into what customers require.
Xwerx have been assessing how companies can best meet these challenges. Contact us to discuss your requirements.
More on what Xwerx can help with:
- User research
- Journey mapping to identify customer touchpoints
- UX design and front-end development to see new products from ideation through to prototype development and beyond.
- Rapid prototyping of innovative data visualisations and features