Most consumers are unaware of how the EU’s Second Payment Services Directive (PSD2) will impact them, while others are actively concerned, a recent survey has found.
Despite the European regulation coming into play in less than six months, 89% of consumers are not aware of the impending changes to the law, a consumer survey from financial services technology firm, Intelligent Environments found.
Fears that their online safety would be compromised if consumer data was shared with a third-party, were expressed by 66% of respondents.
The fact that PSD2 meant their accounts may be spread across multiple providers made 65% are nervous that their accounts will be harder to manage.
A further 70% said they would worry about a lack of clarity on where their data is, or who owns it and 72% were worried that increased data sharing means they will be bombarded by spam advertising from for third parties.
Ironically, the regulation is designed to increase market competition and improve customer experiences.
Simon Cadbury, (pictured) director of strategy and innovation at Intelligent Environments, tells GTNews: “Financial service institutions – including banks – should be doing more to articulate the benefits to consumers, of which there are many.”
He used financial products as an example. “PSD2 will allow account information service providers (AISPs) to use banking data (such as account balance, last 90 days’ transactions, regular payments inflows/outflows, bills and subscriptions, and product holdings) to provide consumers with tailored financial products and potentially money-saving opportunities or incentives. Doing this, will put banks on the front foot in the consumer’s eyes,” says Cadbury.
Jerry Mulle, Intelligent Environments sales and marketing director, says: “Of course, security is of utmost importance and while increased data sharing may set off some alarm bells PSD2 has many in-built safety functions to ensure confidential information stays safe.
“Crucially, consumers have to ‘opt-in’ to allow third parties access to their data, ensuring that no one sees financial details without their permission unless you want them to,” Mulle adds.
Educated consumers are up beat about PSD2
Intelligent Environments said that after the benefits were fully explained to the surveyed consumers, many were more positive.
Over a fifth (21%) said they were looking forward to being able to manage multiple bank accounts from a single app while over a tenth (11%) expressed interest in receiving objective, third-party advice on better managing their finances.
A further 21% believe it will be more convenient to manage their money, and the same amount think it will provide a better overview of their money through digital finance.
“Despite financial institutions’ best intentions, there is still a lot of uncertainty and doubt around the introduction of PSD2, with consumers either unaware, or actively afraid of the new rules,” says Mulle.
“Despite these worries, the reality couldn’t be more different: PSD2 has been created with the consumer in mind, and is set to revolutionise the financial services industry, helping provide users with the option to better manage their finances while avoiding debt,” he adds.
Banks fear data sharing
Some US banks are taking legal action to block access to bank data under US opening banking regulations as they fear competition from challenger banks.
There has been an ongoing discussion between banks and fintech companies over the mechanisms of the legislation, and the European Banking Authority (EBA) has rejected a proposed amendment to the rules from the European Commission that would have allowed for the continuation of screen scraping (using a computer program to copy data from a website).
“Some fintech companies are strongly in favour of reversing this decision, claiming that reforms will provide banks with the means to control what data is shared, putting new entrants at a disadvantage,” says Cadbury.
“However, under current legislation, any accredited third party (AISPs) can access a consumers’ account information and transaction data (with their permission). Unless this law changes, open banking legislation will not be impacted,” he adds.
Cadbury argues: “Consumers continue to rank traditional banks as their first choice for the AISP role and challengers will need to address this if they want to convince consumers they too can be trusted.
“Traditional banks still have a huge advantage in being well-known and established brands, in fact, our own research found that over 60% of consumers trust the traditional banks over challenger banks when it comes to taking care of their data. To combat this, the challenger banks will need to present a compelling proposition, alongside demonstrating total security, before they can win consumers over.
“To combat this, the challenger banks will need to present a compelling proposition, alongside demonstrating total security, before they can win consumers over,” he says.
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