The Payment Services Directive 2 – PSD2 – builds on the 2007 Directive, offering Access to Accounts – XS2A. This promises major disruption of the status quo in the European payments services industry. The big question now is: Do banks react to this development exclusively as a threat to ”old” lines of business, or do they recognize and exploit it for the true digital innovation opportunity it really is?
THE CONTEXT – MUCH MORE THAN “COMPLIANCE,” THIS IS A NEW HORIZON OF TRUE DIGITAL POTENTIAL
PSD2 is a milestone event. Not just because it is another instance of major compliance-driven change. Not only because it has many implications for banks at the technology, operations and even business model levels. And not even just because it represents another potential disintermediation threat to banks in their account holding and payment enabling roles. The really big news is this: Banks that are truly focused on new opportunities will react to PSD2 as a catalyst for entry into an entire new phase of “digital for banks.”
Delivery platforms and channels are only the beginning. The changes will more importantly affect customer experiences and user interfaces. This is a true – overused, but here entirely appropriate term – paradigm shift. Why? Because banks now have real potential to define and deliver “Digital Bank 2.0,” in a clear move away from “bookkeeping on more sophisticated platforms.” It is a chance to become true content originators through providing real, innovative new business models.
ENTRY TO A DIGITAL ECOSYSTEM
The most creative and productive way to view PSD2 is not as a threat of “removal of traditional rights,” but as the driver needed to explore, design and implement a new digital ecosystem. The first step is recognition that the impact of PSD2 on account detail access and payments enablement is just the beginning. A digital ecosystem that centres on an API “layer” can offer banks the opportunity to align with a whole range of complementary players that until now have been seen as alien. These include utilities providers, e-commerce specialists, retailers and fintechs. Nor does this require investment in from-ground-zero technology. Already – today – some fintechs offer leased pre-existing API functionality that can enable and accelerate the creation of whole new business models within a new digital ecosystem.
WHAT ADVANTAGES DO BANKS HAVE OVER NEWCOMERS?
PSD2 is all too often presented as a “newcomers’ licence.” This view must be challenged. In the digital ecosystem, banks have many diverse advantages over first movers and disruptors. Banks have broad and deep proven data handling and holding capabilities. They have brand profile and brand trust. They have pre-existing infrastructures. Far from being the “targets and victims” of PSD2-driven disruption, banks should own the next steps and shape the digital ecosystem to best reflect their customers’ next generation of needs and their own commercial best interests. As they do so, however, they must bear in mind that sheer organizational size is less important than the agility required to build, manage and encourage these new business models in the digitally enabled ecosystem.
IS THIS DIGITAL ECOSYSTEM OPTIONAL?
No. Because if some traditional players don’t scope it out, implement and exploit it, the others (along with all the newcomers) will!