Scrapegators, what’s that? According to Malauzai Software, that’s the term used for vendors that “scrape” digital #banking #apps on the internet to gather data and then provide that data to fintechs. In other words, they are aggregators. Think Mint, Yodlee and Intuit, who, according to Malauzai Software’s Monkey Insights February 2018 report, are the largest …Read More
Bank Innovation
EXCLUSIVE – Everything in #banking is changing: fintechs are solidifying their place in the financial ecosystem, as challenger #banks, online lenders, and #blockchain #technology providers become essential functions to keep the industry moving forward. As the innovations of these startups seems set to continue, 2017 seemed to mark the year that banks set themselves with …Read More
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.
The Turritopsis dohrnii, commonly known as the immortal jellyfish, is an extraordinary survivor. Through the rare, natural transformation of cells, an adult can revert to the polyp stage at any time—essentially being reborn as a young jelly.
The #Open #Banking trend is beckoning traditional vertically integrated #banks toward a similar transformation, where they can hit the reset button on their business models to pursue new opportunities, grow their business and guarantee their continued relevance. Driven by regulation, competition—or both—banks are increasingly using APIs to make certain customer data available to third parties. Those third parties can then embed that information into their platforms to improve offerings (theirs and, often, the banks’) and benefit end customers. This reciprocal exchange is causing a rare, natural effect: #bilateral #trading that can fuel a rebirth in banking.
On the outbound side, banks become exporters of not only customer data, but also bank-owned algorithms and business processes. It also positions banks as advisors to help create new products and services that help third parties and consumers capitalise on bank exports. By enticing and training developers to use their API-delivered component services, for example, banks can offer existing customers new services like single sign-on, the ability to pay with credit card reward points, and open accounts right from third-party sites. Consider how Mint.com is extracting and consolidating customer account information to help consumers organise and manage their personal finances. Mastercard is unbundling its services, like consumer credit check or identity management, and offering them to fintechs and other banks. Through such exports of information and services, banks can amplify their reach, distribution and customer loyalty.
On the inbound side, banks can easily and meaningfully plug-and-play product and service features from third-party partners into their own customer-facing offerings. By doing so, they can embed themselves in more transactions—from banking products they don’t already offer, to home, auto, consumer goods purchases, travel and other non-banking services. Through its partnership with OnDeck, for example, JPMorgan Chase offers small businesses loans that lie outside its traditional risk appetite. Even new challenger banks like Starling in the UK are adopting a marketplace strategy, where they offer third-party products on their app, in addition to their own current accounts. The extreme version of inbound open banking would be to only offer third-party products, making money from orchestrating a full platform-based business to improve customer service, build customer loyalty, generate new fees and lower operating costs—without the ‘bank’ having its own balance sheet.
More and more bank executives are seeing Open Banking as an opportunity rather than a threat. But seizing that opportunity requires mastering both the art of interdependence and bilateral trade. It requires investing to regenerate the bank and open up to third parties, creating value from both export and import flows, and differentiating the brand within and beyond financial services.
I invite you to read our report, The Brave New World of Open Banking, to learn more.
The post Banking born again: The power of Open Banking bilateral trading appeared first on Accenture Banking Blog.
EXCLUSIVE— #Online #banking service for U.S. #customers of TD Bank was #down for #over a #week after the bank updated to its digital services, prompting multiple customers to flock to social media to express outrage, frustration, or calls to leave the bank. The bank, which noted that it has experienced “#technology challenges” as a result …Read More
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.
EXCLUSIVE – With over 28 million digital customers (online and #mobile) in 2017, it seems only logical that #Wells Fargo is increasing investment in its mobile app. That investment ranges from initiatives of improving the existing mobile experience to incorporating new technologies like biometrics over the course of the year, Ryan Miller, senior vice president, design …Read More
Bank Innovation
EXCLUSIVE—As the #technology matures, many #banks and fintechs are turning to artificial intelligence, machine learning, and #predictive analytics to provide new tools and features, in a bid to increase the #financial #literacy of their customers. #Wells #Fargo, for example, launched a new predictive #banking feature into its mobile app this week, which will allow mobile […]
Bank Innovation
Mobile #banking has officially gone mainstream: 55% of U.S. adults have at least one full-service banking app on their phones now, according to a study conducted by BankRate. Additionally, those consumers with bank #apps are active users, with 70% stating that they use their app at least once a week, the survey of 1,156 adults […]
Bank Innovation
Is #digital #banking killing physical #bank branches? How much truth is there to the longtime fear that online banking will replace consumer interaction with bank #branch tellers? Well, a lot — at least, so it seems from a Wall Street Journal report indicating that #banks are shutting down more branches now than they have in […]
Bank Innovation
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