The Revised Payment Services Directive and What It Means for Your Customer Experience, Part 2: Utilities and Everyday Banks
Accelerated change has transformed many aspects of the financial industry over the last several years. From mobile wallets like Apple Pay to digital-first banks like Mondo, new competitors have disrupted old paradigms, and forced every bank to place the customer experience front and centre.
In the first blog post of this two-part series, we examined two types of service providers that will find themselves newly empowered by the PSD2 regulations—third-party payment initiation providers (PISPs), who’ll enable customers to make purchases from any bank account using phones and other connected devices; and account data aggregation service providers (ADASPs), who’ll leverage data from multiple bank accounts to provide personalised spending analyses and recommendations to customers.
Now, in this second article, we’re going to explore the implications of PSD2—and the new disruptors it empowers—in terms of your own organisation’s approach to customer service. What does PSD2 really mean for your organisation, from a customer experience perspective, and how can you leverage it to gain a lead on your competition?
It all starts by making a crucial choice about the nature of the service you provide.
The utility approach
If, at the bare minimum, you choose to simply comply with PSD2 and take no other action, then you risk losing both significant volume and quality of customer interactions. This will put you in what has been called the “utility” category: managing the core underlying banking systems and providing access to it to third parties who own the customer experience,
Think of it like the National Grid. They provide the core infrastructure to connect homes and businesses to electricity and gas supplies, but the likes of British Gas and EDF provide the “front-end” customer experience.
Banks that go down this route will no longer serve customers in any traditional sense, just as the National Grid doesn’t really serve customers directly. Instead, these banks will provide the dependable, easily accessible backend infrastructure that customer-facing service providers need to function.
Yet, although some banks may choose to follow this utility route at the expense of their customer-facing functions, they are likely to lose out on market share in the long term.
If the utility approach doesn’t sound particularly appealing, a second option is to become more of an everyday bank—a customer-facing service provider that aggregates data from accounts at your bank and others, and offers services that leverage the open APIs to help customers in ways others can’t.
To succeed, these everyday banks will need to realise the power of customer insights by combining their own first-party data with the data made available through the open APIs to differentiate themselves by offering standout digital experiences and services that are highly personalised and tailored to the individual. These customer-centric experiences will need to bring content and data together to delight the customer at every turn by anticipating each customer’s needs. By raising the bar, these everyday banks will gain market share, ensure customer loyalty, and drive growth through new revenue streams.
These changes will impact everyone from retail banks to wealth management firms—anyone who interacts and engages with consumers. For example, if an insurance provider can access a customer’s historical data, then consumers will start to expect highly personalised and unique quotes tailored for them. As the data shared will be ubiquitous, the differentiator will need to be not only the bespoke quote, but also the experience and the way the insurance company engages with them.
The good news is that this isn’t an “either-or” choice. Your organisation can function both as a utility and as a customer-facing everyday bank; and in fact, this is very likely the smartest approach of all. Banks that become solely utilities will gradually vanish into the background, while those that focus on providing products and services that address both financial and nonfinancial needs of the consumer, combined with great experiences, will become an everyday bank central to a customer’s needs.
Most banks are still debating the technical, IT, and security challenges that the PSD2 poses. But if you decide to follow the everyday bank route, it’s time to start focusing on the user experience now, to make sure you’ll be ahead of the curve in becoming a leading everyday bank.
Thanks for joining me on this two-part series on the ways PSD2 is poised to transform the customer experience in banking. If you’re ready to take the next step on your own organisation’s journey toward better customer experiences, we at Adobe are here to help.