Are Open Banking and PSD2 a real threat to banks?
Mike Gordon is chief executive of Callcredit, says YES.
Banks make most of their money from a few products, which they package along with current accounts. Open Banking and PSD2 will change this model, as shown by our recent research with Ctrl-Shift.
Open Banking requires banks to share their enormous data collections. Often, this data is not used effectively, and while banks are already looking at ways to make more of it, new competitors have the fresh tech and talent needed to use this data to greater effect.
With it, they will create new services and opportunities that challenge the more traditional banks, which in turn will need to change and adapt. PSD2 is a lesser threat, but still significant.
It will open up the highly profitable payment services market, which will be attractive to fintechs and established tech companies, like Amazon and Google. China is a blueprint for this, where Alibaba, Tencent and Baidu already offer payment solutions.
Open Banking and PSD2 will necessitate change to traditional banking models. Those that do this well will be the ones that prosper and succeed.
Frank Jan Risseeuw, chief executive at Yolt (part of the ING Group), says NO.
Recently, the only constant factor in banking has been change.
New entrants to the market, developments in technology, changes in customer behaviour and new legislation mean that banks continuously need to adapt their business model to stay current. However, PSD2 shouldn’t be seen as a threat; it is just another step in this process, which will only become an issue if banks don’t continue to evolve.
Open Banking is a great opportunity for banks to improve their customer experience. It not only makes it easier for customers to manage their money, but also empowers them to make smarter financial decisions.
In this way, Open Banking can help organisations to deliver a differentiating customer experience and stay ahead of the competition.
Banks, including challengers, are already evolving to take advantage of Open Banking. Yolt, for example, was designed with these principles in mind, and as such we are able to harness the power of Open Banking to give people more insight and control over their money.
Read more: What does PSD2 mean for you (and your bank)?