Three Key Challenges For Banks After PSD2

This requirement stems from the EU Directive PSD2 which formally entered into force. Over the next three months, banks will consult with fintechs to confirm the correct functioning of the developed interfaces and identify possible areas for improvement.

Challenges for banks after PSD2

Safety first

The PSD2 Directive requires banks to implement strong customer authentication. Banks must convince their customers to use two-step authentication. Strong customer authentication will require more time to log in or complete a transaction. Banks therefore need to ensure their customers understand that these new requirements help protect their money and data from theft or leakage. Many of them still have to continue to modernize their IT systems before the regulation comes into force. It is responsible for providing data between banking systems and external systems and has its own business logic that enables customer service across multiple channels simultaneously and provides relevant data in real time, in the right place and at the right time.

Fight for loyal customers

Banks forced by the directive are changing for the better. The vast majority of them implement new strategies, because open banking offers a chance to improve the quality of services for bank customers. As shown by the Polish Association of Banks and a study by KPMG published last week, banks enjoy enormous trust compared to the rest of the competition. The UK’s experience with the implementation of open banking suggests that banks should see the next year as a time to look for new ideas and new partnerships, especially in the eCommerce market. This will give them a chance to take care of a customer whose loyalty is likely to increase when the bank starts providing higher level services.

Global giants are getting into the game

The Association of Polish Banks and the KPMG study cited above state that up to 40% of banks perceive other banks as their competitors in the first year after the implementation of PSD2. But in a few years’ time, the majority of respondents believe that GAFAA companies will become more active and become their competitors. When PSD2 actually enters into force, in six months even global giants will be able to offer financial services using customer data published by banks. Competition from small, innovative fintechs may prove to be quite unthreatening as online giants enter the fray for consumers’ money. Their experience in designing ultra-ergonomic services supported by millions of A/B tests to improve the user experience and the huge potential of the whole mass of user data they already have are real weapons of mass destruction.

Conclusion

The sensible use of big data and effective forecasting, so that the bank really takes care of the customer in many different aspects of his life, are no longer just interesting news.