A rapidly changing, interrupted market.
European Banks are already prepared for Europe’s revised payment services directive (PSD2) and the UK’s open banking standards. Compliance is clearly a top priority, ensuring that while maintaining data privacy and network security, it allows third parties to access customers and prevent fraud and financial crime.
In this case, we may be able to understand how Banks defend their market position, or even their strategies to launch new products and acquire new customers.
Coping with competitive threats
Many types of new entrants may emerge, such as peers, challenger Banks, retailers, financial technology start-ups and mature technology companies. Banks should understand the main risks and conduct vigorous competitive analysis to identify key emerging companies, their likely products and strategies, and the customers they are most likely to target.
Understand every niche of bank customers, understand their behavior and motivation, according to their response to open banking and bank products expected, and fine-tune products and marketing to run, it is very important.
It’s not just defense: open banking brings a whole new set of potential opportunities.
Open access to bank information allows Banks to learn more about their own clients and other Banks and credit CARDS. This information can be used as part of the “digital wallet” service, where customers access all different accounts using a single bank branded smartphone app.
Banks may choose to work with financial technology start-ups and/or investment incubators to quickly bring services to the market, rather than doing it alone.
Towards a new type of customer relationship.
Historically, Banks have fully controlled customer transactions and consumer information. PSD2 and open banking may take this advantage away, but it also presents a unique opportunity to learn more about customers. With a renewed focus on relationships and services, Banks can consolidate their traditional role as custodian of consumer finance.
Banks should consider three steps.
Compliance: formulate and implement regulatory action plans.
Competition: defend the position of new battlefields and existing challengers, and avoid mass customer disintermediation.
Innovation: to gain competitive advantage by seizing new market opportunities – adjust operation mode and technology.
Learn more about PSD2 by downloading this article (PDF 157 KB) and open your banking business, or contact your local KPMG consultant to find unique opportunities for your organization.