Banking is a game. Obviously it’s a very serious one, as it floats our economy and therefore influences all of our lives. But still, banking is a game, meaning it needs to be played. There is a playing board, there are players, and most important of all: there are rules. Players that don’t obey these rules get excluded from the game (or go to prison, just like in Monopoly) and people that play it smart, take it all. But as is the case with all games, rules change. So, what do you do when the quizmaster forces you to invite 2000 new players and show them your strongest cards? You smash the playing board to pieces and invent your own game.
Explaining the game
If you’re a banker, chances are you weren’t particularly happy with the PSD2 directive. Now that third party providers are allowed to dive into your checking accounts and use them for their own benefit, it seems like you had to hand in your greatest asset. Because of the directive, you no longer hold the exclusive rights to the financial data of your customers, neither can you prohibit your customers to engage with third party services, that may be your direct competitors. Obviously, the European government meant well. The PSD2 directive will make banking more transparent and customer centric, as the customer can take his financial data wherever he wants, using it in all kinds of apps that make his life easier. But it can be good news for you too, as long as you follow some new playing rules.
Playing rule no. 1: Don’t pout
New legislation can make you wonder if your bank is future-proof enough to survive. You may think you guys are too old-fashioned and rigid to change, so you might as well keep on doing the things you do and wait for it all to pass. But if you go and sit there with your arms folded, you’ll definitely lose. Now that PSD2 has turned every single company in the world into a potential competitor, you need to rethink your strategy. Get together the key figures of your company and reconsider everything you thought was set in stone. Learn about the consequences of the new directive, then make new competitor analyses and draw up the new playing field. Don’t wait until the next board meeting: the game has already started.
Playing rule no. 2: Decide on your role
Now that you know about the changes and their consequences, you must decide on your new role. Consultancy agency Accenture points out that banks face the challenge of deciding whether they want to become a utility provider or a so-called Everyday Bank. If your main goal is to survive the storm and comply with PSD2 without making major changes, we advise you to narrow down your services and focus on what you do best. In this case, you’ll become a utility bank that provides customers with services through third party providers. The second option is to take digital banking to the next level by becoming a bank that plays a central role in the lives of its customers. You can do this by becoming an Everyday Bank: an ecosystem of mutually beneficial relationships between you, third party providers and customers.
Playing rule no. 3: Use APIs
If becoming an Everyday Bank is what you aim for (and to be frank, we believe you should), you’ll be needing technology to make the ecosystem a success. Being an Everyday Bank means you’re part of pretty much all aspects of your customers’ life, such as healthcare, leisure, traveling, transportation, information, and communication. It’s your task to make all of these elements come together by enabling communication and data exchange between the applications of third party providers and your customers. Here, APIs are your friend. These digital revolving doors help you gather information from sensors, applications, and people, which you can integrate, analyze, and act upon. When you open up your systems with APIs, you not only comply with PSD2; you create a network of applications and providers that together create the ultimate customer experience. If that’s not smart banking, we don’t know what is.
How will you play the new banking game? Tell us by leaving a comment below!
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