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4 Banking Innovations that Make Our Lives Easier Thanks to Open Banking and PSD2

14. May 2018 / in Trends

Open interfaces, new cooperation models and real-time data exchange: Open banking is a real bestseller. Whether it’s smart traditional banks, innovative Fintech startups or banking newcomers, everyone involved reaps the benefits from this new openness in banking.

PSD2, which came into effect throughout the EU on 13 January 2018, is triggering the next digitalisation push, which will particularly benefit customers in the end. The opening of payment transactions to non-banks promises increased competition with many new offerings. We have carefully examined four auspicious banking innovations that will make our lives easier.


1. “Alexa, Pocket Money for My Daughter, Please!”

Smart voice assistants create a serious user interface for banking products. Tens of millions of Alexa deviceswere sold by Amazon last Christmas alone. The small speakers are becoming a universal talent in many households and should soon be an important access point for banking activities.

Alexa is elevating living room banking to a new level of comfort through voice-based P2P payments.

So far, the reliable identification of the customer has been regarded as a challenge. In an average household, several people use a single device at the same time. However, technology provider Daon now has a solution in the pipeline: biometric voice recognition, which forms the basis for making P2P payments via Alexa. This means that Amazon could soon become the voice-based interface for bank transfers and other everyday transactions – safe, fast and super convenient.

The banking innovation at a glance:

Numerous banks are already working on their own skills for Alexa, for example, to request the account balance or to transfer funds between a person’s checking and savings account – even if Amazon is currently stepping on the brakes in Germany and Europe. What will be new is the possibility to transfer money to friends, colleagues or your landlord via Alexa. However, this is only viable through the biometrics function with voice recognition.

Who benefits the most:

Voice-based P2P payments elevate living room banking to a new level of comfort – and it is customers in particular that will benefit from it: Media disruptions will disappear, complicated security mechanisms will be superfluous and everything will become much more convenient. Nevertheless, Amazon itself is one of the winners here and its new Alexa function only serves to emphasise its position as a very, very serious player in the financial sector.

When it will be ready:

According to CNET, the first banks could start using the new Alexa service this year – at least in the USA. The technology provider Daon reports that it is already in discussion with several large banks. We do not expect it to reach Europe until 2019.

2. Mobile-First Banks Offer Even More Added Value

Challenger banks such as N26 from Germany and Revolut from the UK have come up with a noble objective: banking in the way that Generation Mobile really loves. You could say “Mission accomplished!” because the success story of the new Fintech heroes is almost too good to be true. In just under two years, N26 has acquired a million customers in Europe alone and is now expanding across the globe – in Germany, France and the USA, among others.

Mobile banking apps are turning into the digital control centre for all sorts of financial transactions.

Thanks to PSD2, the pace of innovation will accelerate further and challenger banks will utilise this to bring new services to their customers. It’s about the better use of customer data – for the benefit of the customers! With additional digital offers, the banking experience can be expanded and harmonised step by step so that mobile users can ultimately access all services via a single user interface, namely their smartphone app.

The banking innovation at a glance:

Mobile banking apps are becoming the digital control centre for all financial transactions: no cumbersome switching between different websites and apps, each of which has a separate login and whose user experience is different. Even classic banks can make an innovation leap thanks to the cooperation initiated by PSD2. If customers cover most of their everyday financial affairs with a single app, this will save time and reduce stress levels.

Who benefits the most:

All customers who prefer to organise their daily routine on their mobile! An average smartphone user touches their display 2,617 times per day. Utter mobile geeks touch it 5,427 times! How nice it would be for this target group to handle bank transactions, and, ideally, all financial operations such as shares, loans and insurance via a smartphone app.

When it will be ready:

We are already there! For example, N26 made common cause with the digital insurance manager Clark some time ago. Clark shows N26 customers the most appropriate insurance rates for their individual situation on their app. It is easy to imagine that new offers such as bank lending will soon be added at the click of a button.

3. Bank Lending in Seconds Without Any Paperwork at All

On the subject of bank lending: Those wanting to externally finance the purchase of a new car or that long-awaited favourite piece of furniture are also among the winners of open banking and PSD2. The exchange of customer data in real time allows bank lending to happen in seconds.

PSD2 and Open Banking enable seamless data exchange resulting in loan commitment in seconds and without any paperwork.

Whereas previously there were many manual steps required to acquire an instalment loan with the entire process often taking several days, everything is now completely fixed. Time-consuming discussions about financing plans with the bank advisor, gathering together countless bank statements and payrolls as well as complex analysis of the income levels are all a thing of the past.

The banking innovation at a glance:

Online credit intermediaries such as smava, Finanzcheck and Check24 are already providing customers with an overview of attractive loan offers within seconds. In addition to the convenient search for and selection of a provider, it now provides a way to conclude the contract digitally. Online lenders such as cashpressopromise customers a loan commitment within 10 minutes. With a better organised data exchange among providers and supported by artificial intelligence, this process can be reduced to a few seconds.

Who benefits the most:

For customers facing a major purchase decision, the complicated lending process spoils the anticipation of acquiring something new. However, online lending spares you the hassle of sending and receiving documents as well as signing the contracts in writing. Now everything is digital and fast! Incidentally, the same principle also applies to companies that are looking for external financing. For example, Funding Circleoffers quick lending of corporate loans.

When it will be ready:

Many online banks have been offering their customers digitalised loans for some time now. However, the paperwork is often replaced by uploading PDF documents – it is not yet 100 percent digital. With the improved exchange of customer data in accordance with PSD2, such workarounds are soon likely to be a thing of the past.

4. Facebook Messenger Turns Online Banking into Chat Banking

Even though user growth has stagnated in recent times, Facebook is still by far the largest social network with over two billion active members. Anyhow, Facebook sees its own future in other areas, namely in messenger services, among other things – and of course this would be with its current hobbyhorse WhatsApp and its own Facebook Messenger, though the latter is still lagging behind.

Facebook Messenger paves the way to chat-based banking thanks to Open Banking and PSD2.

While WhatsApp users enjoy cat videos, Facebook Messenger is turning into a digital all-rounder. Integrated intelligent services should provide users with a comprehensive customer experience in the future – and banking services will play an important role in this. Facebook’s aim is to build a digital ecosystem, comparable to the Chinese WeChat platform.

The banking innovation at a glance:

PSD2 opens up the possibility for Facebook to offer payment services. As a first step, Messenger users can transfer money between themselves and waive traditional or PayPal transfers. However, an eye on the future is of greater interest: If Facebook manages to tap into bank data via API, then the road ahead is clear for Messenger to initiate chat-based banking. Now that would be a real innovation in the banking market!

Who benefits the most:

First of all, this will benefit all Facebook users who can part with WhatsApp and become friends with Messenger. The transition is not easy: The operation and the entire user experience differ drastically from each other. However, if Facebook succeeds in integrating services with clearly perceivable added value into its Messenger app, then there will be fewer reasons not to say goodbye to WhatsApp.

When it will be ready:

Facebook announced a P2P payment service for its Messenger app in November 2017, initially limited to the UK and France. The fact that the Messenger department has been run by former PayPal boss David Marcus for some time speaks volumes about the Californians’ growing ambitions in the financial sector. There is a lot of movement at Facebook, and the social network is not playing its cards close to its chest. It remains exciting – and we will stay on the ball!

You would like to get to know all the details about PSD2 and why the new directive creates the ultimate basis for banking innovation? Send us a message and we will send you some informations about PSD2!

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Schlagworte: Trends

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