EXCLUSIVE— One of the largest draws for a credit card is its #rewards program—an area #banks have been competing in for decades. But will the approach #need to #change as more consumers chose to bank exclusively on #mobile? For Citibank, the answer is no. The bank is going to focus on integrating the rewards program […]
Bank Innovation
EXCLUSIVE – Neobank #Aspiration has added #joint-account capabilities to its offerings, as the self-described bank “with a conscience,” continues to target those disenchanted with their larger #banks, company CEO Andrei Cherny told Bank Innovation. Does Bank of America’s recent decision to nip its free checking account come to mind? Well, that’s exactly the type of […]
Bank Innovation
Yogi Berra had it right.
Nevertheless, I would like to share some of my impressions about the issues that will be top-of-mind for #banking executives this year.
Originally posted to my Forbes.com blog, these thoughts came together as a result of the various experiences and conversations I’ve had with clients over the past 12 months.
People will have their own opinions and in the end, I may be proven wrong. Regardless, I welcome lively discussion and discourse. Here are 10 trends to keep an eye on in 2018.
The post 10 trends that could change the shape of banking in 2018 appeared first on Accenture Banking Blog.
U.K.-based #CreditLadder, an online platform that enables tenants to help build credit score, launched an #open #banking #service today, making it the first in its sector to do so. Thanks to European regulation PSD2, users can now authorize CreditLadder to access their banking transactions through open APIs. By accessing information on a user’s transaction history, […]
Bank Innovation
EXCLUSIVE—Two out of three U.S. adults are #already comfortable interacting with retailers, #banks, and other companies using natural language #technology, according to a study released by #Mastercard today. The study, conducted by Mastercard and Mercator with 3,000 U.S. adult participants, found that consumers are already quite comfortable using text or voice-based technology — which relies […]
Bank Innovation
EXCLUSIVE— When #Goldman Sachs & Co. launched its Marcus #digital bank in late 2016, the conventional wisdom was the investment bank wanted to expand into #retail #banking. But, apparently, that’s not the whole story. Marcus, it seems, is an asset #pricing play, Goldman&8217;s CEO implied yesterday. “It’s not just the way people are communicating prices, the […]
Bank Innovation
The American square #dance evolved from 16th-century English folk dances, in which the dancers are prompted or cued through a sequence of dance steps by a caller to the beat of the music. The caller is typically on a stage beside the musicians, giving full attention to directing the dancers.
Payments stakeholders in Europe are gearing up for #Open #Banking, a new type of square dance where they are answering the regulatory compliance calls of the revised Payment Services Directive (PSD2). If they pick the right partners and are skilled enough in the dance, then they’ll stick around long enough to benefit from the new value being created. But if they are not careful, they risk falling over their own feet. #Banks need partners in this new dance and some of the most important are retail #merchants.
PSD2 allows consumers to grant merchants access to their bank accounts for direct payments, rather than using a credit or debit card. By using bank-to-bank payments, merchants can clear and capture funds faster and significantly reduce—if not eliminate—the fees they pay for card and processor interchange services. The British Retail Consortium estimates that merchants in the UK alone could save £650 million per year1, thanks to the PSD2-required Interchange Fee regulation. Innovative application programming interfaces (APIs) will play an important role in enabling retailers to deliver faster, more personalised shopping experiences at a lower cost.
Smart banks will view merchants as attractive dance partners—and will help them optimise Open Banking to reap benefits and grow their business—despite it cannibalising existing bank revenue streams. If banks sit on the sidelines, then the merchants will undoubtedly find other partners.
For example, banks can offer APIs that give merchants access to the bank’s capabilities. A recent Accenture online #pulse #survey of 50 payment executives within the European retail industry indicates that most plan to implement PSD2-related APIs over the next two years. Only nine percent of the retailers who are familiar with PSD2 do not have any immediate plans to do so; 63 percent of them cited slow customer adoption as the main reason. Most of the retailers we polled would consider embedding bank account balance displays, payment initiation, and bank account transaction history APIs into their point-of-sale (POS) systems.
Considering high levels of consumer confidence in banks handing their data and transactions, banks are in a strong position to take on and dominate the new role of registered account information service providers (AISPs). In that role, banks can aggregate their massive amounts of customer transaction data (that is approved by regulation and authorised by consumers) to isolate and identify spending patterns based on age, region, store location, and so forth. (Think Nedbank Market EdgeTM) Merchants will value and pay for such insight to gain a better understanding of their market and to tailor their offers. Seventy-four percent of retailers familiar with PSD2 say that access to better consumer information is most important to their organisation, followed by API-initiated payments (53%), fraud reduction (53%) and the ability to generate offers at the POS based on insight from bank account data (51%). As AISPs, banks can serve as financial advisors to both merchants and their shoppers to monetise their data.
Like the AISP role, banks are well positioned to serve as PISPs, initiating direct payments to merchants on behalf of their customers. Seventy-six percent of consumers we surveyed are likely to choose traditional banks as their PISP over third-party PISPs. Merchants are also likely to choose to partner with PISP banks to accelerate the bypassing of card networks for online payments, improve their merchant service fee structure, and gain access to ancillary services. Over the next three years, 65 percent of European merchants plan to use a third party to provide AISP or payment initiation service provider (PISP) services. In operating a PISP service, a bank would have the opportunity to capture an additional slice of transaction revenue while also providing opportunities for customer loyalty schemes and cross-selling. Accenture estimates PISP services could account for up to 16 percent of online retail payments by 2020. It’s an opportunity for banks to help merchants deliver more seamless shopping while also protecting their own relationships with customers, and avoiding being cut out of the value chain by merchants and other non-bank players.
Whether collaborating in promenade or do-si-do style, banks and merchants can perform a variety of Open Banking dance moves to strategically lead the migration away from card payments. Banks can become “the dance caller,” giving full attention to directing the migration towards new revenue models and market relevance. Those who sit with their arms crossed on the sidelines are unlikely to be part of the long-run future of the industry.
I invite you to share your thoughts on the near-term dance partnership between banks, merchants and consumers.
[i] Currencycloud.com, “How Will EU Interchange Caps Affect the Industry?, February 27, 2016. https://www.currencycloud.com/en-us/news/blog/how-will-eu-interchange-caps-affect-the-industry/
The post Pulse survey results suggest banks should ask merchants to the Open Banking dance appeared first on Accenture Banking Blog.
This post marks the beginning of my career as an Accenture blogger. I’m looking forward to communicating with you in 2018 and beyond and to commenting on developments in the #banking industry in Europe. I joined Accenture late last year as head of the banking practice in Europe. I am an industry veteran with extensive experience both as a consultant and as a banker.
This is an enormously exciting time to be working in the banking industry, particularly in Europe. There is #massive change taking place on many fronts:
As Accenture has noted, most banks in Europe have been vertically integrated, covering all aspects of the value chain from origination to servicing. The universal bank concept is well-established, with the retail sector more stable in recent years than the commercial and investment banking side. Within Europe, there has been more regulation, but regulatory barriers to entry have enabled intra-industry competition. While regulation has deterred cross-industry threats from retailers, telecoms and consumer tech giants, it has also fostered a wide variety of institutions, including private, mutual and cooperative banks.
This is all about to change. The combination of competitive disruption and regulatory actions like PSD2 in Europe and the Open Banking initiative in the UK is forcing banks to open up faster than other industries while maintaining the security that is part of their DNA. Before too long, bank customers will be able to share access to their financial data with non-bank third parties, and third parties will be able to integrate their services with those of a bank to create a better banking experience while keeping client data secure.
#European banks are facing many other challenges, including continuing low levels of profitability and the need to formulate and execute digital strategies. Digital strategies, in turn, call for a new look at how people are selected, trained and motivated as banks shift from product-driven to customer- and people-driven organizations.
I will be writing about these and other topics in the months to come, particularly as they pertain to Accenture’s own vision and its view of banking strategy, #technology and operations. I welcome your comments and questions, and look forward to a lively exchange of ideas.
The post Confronting massive changes in European banking appeared first on Accenture Banking Blog.
EXCLUSIVE – There’s a new #banking app in town &8211; #Emma. The British #fintech company, which is still in beta, is gearing up for its launch in the U.K now that it received FCA approval to operate under the new PSD2 mandate. “This is a big deal for us,” Emma co-founder and CEO Edoardo Moreni […]
Bank Innovation
#Fintech lender #Tandem has officially completed its #acquisition of #Harrods #Bank, a move that grants the London-based lender a #banking #license, it announced yesterday. A mobile-based lender that allows customers to aggregate all of their financial information in one place to help users save and budget, Tandem lost its banking license in 2017 after an […]
Bank Innovation
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