While Fintech pushes the possibilities of how and where financial services can operate, there are other parts in motion.
In Europe, new regulation throws up fundamental new challenges for FS firms.
In January, the Second Payments Service Directive (PSD2) came into effect – regulating payment services throughout the EU and the EEA.
The effect of PSD2 has been widespread. For banks, it requires them to open up their payments infrastructure and customer data assets to third parties, with the approval of the account holder. In the UK, Open Banking (mandated by the Competition and Markets Authority and effectively augmenting the PSD2 requirements) states that the release be done in a standardised format.
For many, it’s a long-awaited move. Not least the reams of FS startups that can now utilise this rich data to make new products and services – and up the competition yet further on the old guard.
But positivity remains. Deloitte’s Regulatory Outlook 2018 report found that 59% of banks, building societies and other credit institutions considered PSD2 to be an opportunity for their organisation. Only 4% thought of it as a threat. (21% saw it as both, 15% as neither.)
The system is still fresh. As Imran Gulamhuseinwala, head of Open Banking Limited, the non-profit responsible for the system, puts it, “It’s going to take a while for us to see really new, very different services.” But, he adds, “it’s going to be revolutionary.”
If the full ramifications of Open Banking and PSD2 have yet to be revealed, one thing is clear: the competitive environment for FS firms has been altered massively. Emerging tech companies are now able to offer insight and new services. Consumers will be spoilt, or overwhelmed, for choice.
For example, research by Accenture found that UK banks risk losing up to 43% of retail payment revenues by 2020 due to the introduction of digital banks.
All of which raises the stakes for marketing and communications. Whether you’re at an established, global, market-leader or a lean, disruptive startup, now is the time to leverage everything available to cut through the noise and get closer to your audience.