PSD2 Recap
Remember that small group of big banks that once ruled the world? Well, their days are numbered. Customers demand more power over their banking accounts and third-party players are dying to provide them with all kinds of new services through apps that make online payments easier. Good news for you, if you’re one of those challengers. If you’re an established bank, however, this turnaround requires some changes. Now that the PSD2 directive has forced banks all around the world to share customer account and payment data with third-parties, developing a modern-proof strategy is the only way to go. Which makes PSD2 also good news, as without it, banks would’ve never changed their ways, probably resulting in bankruptcy (I said probably).
The three-step plan
So, whether you’re a challenger or an established financial player: there’s customer hearts to win, data to share and tools to develop. This, in turn, requires a strategic plan and knowledge on technologies to execute it. According to Seshika Fernando, Head of Financial Solutions at WSO2, there are three steps to take:
- Become PSD2 compliant
- (Re)claim the loyalty of your customers
- Digitally transform
The first step speaks for itself, as ignoring directives imposed by the government will definitely get you in trouble. The second step revolves around delivering services that go beyond the traditional banking business model, meaning you should put yourself in the shoes of your customer and find ways to connect with him and delight him with new and innovative services (sounds promising, doesn’t it?). The third step is to break through the boundaries of the financial industry and become a player that uses data to improve services, expand the business portfolio, and create new revenue streams.
How, tell me how!
Will you relax? I’m getting to it. You may have noticed all three steps in the last paragraph revolve around connectivity and data exchange, whether if it’s with your customers or third parties. This, right there, is the reason why you should include APIs in your PSD2 strategy. First of all, they allow you to exchange data in a secure and controlled way, which is an important PSD2 requirement and makes you a trustworthy organization to the people that are (or will be) in business with you. Second, APIs help you create new revenue streams through API monetization. This means that you use APIs to create models, reports, payments gateways and integration options that together help you drive revenue. Think about transaction fees, new ways to engage and track customers and leads, and an open API platform where third party developers pay you to connect their apps to your services.
“When you turn yourself into a hub that both customers and third-party providers want to connect to, you’re golden”
A PSD2 strategy revolves around trust
Did you know that 76% of Irish and British banking consumers prefer a traditional bank taking on the duties of third-party providers? As it turns out, trust is still an important factor when handling sensitive data. In an earlier blog on PSD2, I told you about the benefits of becoming an everyday bank, and that’s what this is about. When you turn yourself into a hub that both customers and third-party providers want to connect to, you’re golden. Again, APIs can help you make it happen. They are your little virtual revolving doors that safely gather and share information, making you PSD2 compliant, customer-friendly and able to transform into a bank of the future.
If you ask me, the question isn’t whether your PSD2 strategy needs APIs; it’s which API product best matches your business requirements. You can find the answer in the white paper below, where we compare different API vendors and their product features.
