Banks must think beyond the mandatory to make revised Payment Services Directive (PSD2) work for them – comment from Capco

With just three months to go until the PSD2 deadline, Lucia-Florentina Ionescu and Nicole Jaquemet from Capco highlight the remaining hurdles facing banks, and the importance of thinking beyond the mandatory requirements

Comment from Lucia-Florentina Ionescu, senior consultant at Capco:

“Banks across Europe are still grappling with their preparations for the final PSD2 compliance deadline on 14 September 2019, and changes to their overarching operating models and technical capabilities present the biggest challenges. The opportunity to establish partnerships with third party providers (TPPs) under the Directive will help banks drive innovative propositions and expand their customer base, which impacts technology – not least around the need for the APIs that will serve as a gateway between banks and TPPs – as well as risk management and staffing and skills within companies.”

“The cost of meeting the mandatory requirements of PSD2 means there’s been little capacity or budget left over for banks to prepare new products and services in advance of the deadline. But once the September deadline has passed, the industry will move into an exciting phase, where banks can leverage the new set up by launching propositions that maximise the enhanced level of customer insight PSD2 can deliver.”

“The banks that make best use of insights into spending behaviour and a customers’ profile to deliver more personalised services, recommendations and products will be the ones that come out on top. Successful propositions will be the ones that are based on financial data but go beyond banking and become embedded in customers’ everyday lives. Helping customers save and invest in their future, build better credit profiles or travel smarter will make the bank a dedicated adviser with trust and loyalty significantly enhanced.”

Comment from Nicole Jaquemet, consultant at Capco:

“Along with access to accounts (XS2A), secure customer authentication (SCA) is central to PSD2 and an important step forward in the industry’s ongoing battle against fraud. With SCA, each customer journey needs to be carefully considered, and it’s a major technical challenge to implement, requiring additional fraud checks and proactive transaction analysis. The added protection for customers will be welcomed, and thinking beyond its mandatory implementation, the transaction analysis can also be used to better understand customers and underpin their risk profiles.”

“PSD2 has been a major workstream, with new technical capabilities having to be delivered in a compressed timeframe. Banks’ focus over the next three months will need to be on processes and governance to ensure their operating models as API-enabled banks are ready to go once the September deadline hits. However, if banks tackle these challenges strategically, keeping the potential business benefits front of mind, PSD2 promises to deliver valuable new revenue streams.”

Author: Yash Hirani

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