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naglowki do bloga 13.01.20202

In the world of dynamic changes and disruption faced by more and more sectors, only hard facts matter. So let the numbers speak

 

With the PSD2 directive coming into life, the financial sector from all countries around Europe faced a new reality - the necessity to deliver an API to enable the easier sharing of the banking data, But what does it change in the reality of the business, users and the banks themselves?

 

The directive is a fresh change, yet there are already several reports on the market and industry reactions. And these are far from neutral.

234 TPPs provide services
in the European Economic Area

The TPP (Third Party Provider) is an institution that is entitled by the state regulator to provide new services in the financial system.

  • Account Information Service (AIS) provider is a company or other organization that aggregates the information from multiple accounts on the customers’ account balances and loans.
  • Payment Initiation Service (PIS) provider is a company that initiates the payment process using access to the user’s banking account.

According to the Konsentus data, 95% of companies that registered as a TPP are AIS providers, which delivers an interesting insight into the nature of services that will be provided. Apart from access to the account checks and balances, the companies gain broader information on customer identity. And gaining definitive confirmation of the user identity allows companies to deliver more trusted services.

A great example comes from Polish public services, where banks provide the identification infrastructure for applying for state benefits for families.

72% of consumers at least moderately interested
in open banking

According to the recent Accenture report, consumers are willing to share more information with their financial service providers to get a more personalized experience. Growing number of users trust their financial institutions as well.

 

Considering that, open banking is a promising tool allowing every customer to tailor a banking offer for his or her needs. This is in fact nothing new - customer loyalty shrinks as banks compete harder and build new, interesting offers.

 

There is a great number of differences in the bank offers - where one delivers an impressive portfolio of personal investments, another gives consumer discounts and partnerships for credit card users. It is also popular to have an operational account in one bank, consumer loans in another and mortgage in a different one.

 

Open banking delivers a secure and reliable way to manage all these assets via dedicated application - be that an independent online dashboard or a set of sub-sections delivered by the bank to increase the competitive advantage and boost customer experience.

 

There are banks that start to implement such solutions and the stat shown above clearly indicates that the trend will only get stronger.

80% of companies plan to adopt open banking or are interested in doing so

Open banking is, by design, a banking-centered regulation. It brings turmoil and disruption to the banking and financial sector. But it is yet another tool to use in business. There are various cases where banking API can be the best solution, including:

  • Identity management
  • Payments
  • Loans and loan-requests
  • Account information management

The possibilities above can be game-changing in retail and e-commerce, where both data security and the ease of payments or financial management is crucial.

90% of bankers surveyed by Accenture believe open banking will boost organic growth by up to 10%

Considering all the statistics above, one could think that the banking industry is neither ready nor happy to see the changes. In fact, the key competence of the bank - money management - will become a commodity. Basically, any company will be able to provide some kind of banking service via API and apps.

 

Also, banking is used to enclose the customer within a bank-owned ecosystem. With the customer already tied to the personal account, the bank has easier access to the user and can deliver a personalized offer.

 

But that’s only one side of the coin. The other one is getting access to multiple customers of other banks and the ability to deliver a tailor-made offer. The trend is not hampering the banks’ natural tendency to focus on this or that aspect of financial services - it supports it. Bank with an impressive offer of loans is no longer limited to its own clients - with the API it can reach basically any customer, even by using a network of Third Party Providers.

48% of retail banking customers consider security the greatest concern

With every new feature, there is a deal of uncertainty. The same goes for open banking. Banking customers are curious about new features and possibilities delivered by the technology, yet they are not convinced if these novelties are safe. The same story we have seen with cloud computing or even seatbelts.

 

Considering that, it is not surprising that customers are not convinced that the new technology will be safe. Also, the main benefit of the new regulations is the ease of sharing and exchanging banking information. And making the process easier is usually considered making it less secure. That’s not always the truth, yet it is also not a lie.

 

To summarize - open banking is here, whether you like it or not

No matter how good or bad the attitudes toward change are, open banking is here and it is not going to go away. Yet considering the numbers above, there is more optimism than reserve in the way the banking market and clients approach it.

 

And that’s why any company that finds these changes interesting should think about dropping us a line. If you need some consulting or just advice on getting ready for a brave new world - we are here to help you!

 

 

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BanqUP is an API-driven platform for open banking solutions, allowing for banks and fintech companies to access a number of European banking APIs.
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