PSD2: the opportunities and challenges for banks

Interview with Dennis Raabe, Head Digital Experience Management, Deutsche Postbank about PSD2.

The opportunity of PSD2

In what way could PSD2 be viewed as an opportunity in your opinion?

At the moment banks are more or less locked in into their own product-based “biotope”. With PSD2 as a trigger banks now have the opportunity and, at the same time, the challenge to combine this very own biotope with fitting products and services outside of their normal reach. The key point to this is understanding customers and their needs, and herein lies the real opportunity: To learn from data (with the customers’ consent of course) and to use this to find a benefit for the customer.

PSD2 ecosystem for banks

You advise banks to build their own PSD2 ecosystem. Could you please elaborate a bit more on this?

What is the use?

With PSD2 there will be a level playing field for payments and access to payment information in the market. This means banks will not be the only (trusted) access points for such data anymore. They will lose their direct touch points to the customer and eventually become a banking infrastructure provider. To avoid this scenario, it is necessary to find ways to stay relevant for the customer, and here the ecosystem-thought comes in play.

What it would consist of?

The idea is to combine the bank’s own product world with additional products and services, both near- and non-bank related. A bank could build a sort of financial hub where from a bank’s perspective, essentially, not their own products are the most important but eventually the services it offers. Think for example of all the contracts you have personally. A bank – as your financial hub – could analyse your contracts, give you advise on how to optimize them and save real money.

The key to all of this is, in my opinion, building a level of trust with your customers. You don’t want them to look at you as another data-leeching corporate with some opaque intentions, you want them to see you as a trust entity and believe that everything that happens is in their best interest.

What is the main benefit from it?

From the bank’s perspective, the main benefit is to stay relevant in your customer relationship. With PSD2 and digitalization in general basic products like check-, savings- or credit-accounts and their corresponding services will be disconnected from each other. That means – as mentioned earlier – the role of banks can and will be reduced to an infrastructure provider with a weak customer relationship. So now there’s a chance for banks to reshape this relationship with new business models which are fitting the requirements of digitalisation.

Advice reagards PSD2

Overall advice to payment institutions with regards to PSD2?

Don’t think of PSD2 as a threat, treat it like an opportunity.