Fraud inevitably produces innocent victims. With fraud continuing to rise in the financial industry, especially that tied to the skyrocketing adoption of ecommerce, regulations such as Europe’s PSD2 are being sharpened and unleashed to combat the threat. But the regulations themselves bring challenges to all concerned, from merchants and customers to banks, with uneven impacts. How can banks prepare themselves to confront fraudsters while continuing to serve honest customers seamlessly?
Ever since Open Banking first launched in the UK nearly three years ago, the promise of sharing data to achieve more efficient, personalised banking services has been made a reality. Spurred on by increased customer centricity, banks have acted on the PSD2 mandate to deliver smarter, aggregated services to their respective customer base.
Open Banking originated half a decade ago as a European and UK consumer-protection regulatory initiative but has evolved into a popular technological concept. To give consumers more choice and data control, banks share their financial information, after receiving their consent, to third-party providers via APIs. The technology brings benefits to customers but also risks, so the Open Banking process must be carefully upgraded to find its promised place in banking.
It’s no secret that the last decade has been one of the most transformative periods for the global banking industry, at least from a regulatory perspective. Financial institutions have been forced to evolve under this new era of transparency, with authorities taking unprecedented steps to ensure that consumer protection
It’s a fact. The exponential growth of data directly impacts financial institutions’ ability to do business efficiently. And there’s no sign of that growth slowing down, with IDC conservatively predicting a 26% CAGR data growth in financial services companies between 2018-2025.
The issuance of new regulation is not always met with elation, but financial and accounting industries in the European Union have reason to applaud the new PSD2, as it brings advantages for customers and businesses alike. Although the advantages for customers are clearer, such as increased control over their personal data, banks, too, will benefit from such features as better data, increased security and, in the end, more satisfied customers.
Once upon a time, traditional banks could depend on customer loyalty, no matter what. A bank was the one-stop-shop for all things related to consumer finance. Not anymore. Not now that neobanks and fintechs are competing for the same consumers. Although bank customers are reluctant to move their financial business, banks are being increasingly challenged to address their needs first, which is all working out to their advantage.
Why would anyone choose to work for a bank in the Digital Age? For several reasons. According to one chief innovation officer, if you enjoy challenge, energy, innovation, agility then the right bank is the right place for you. As banks face a pivotal moment, warding off inventive challengers on every side, the secret to their longevity resides in customer-centricity. Product value is still important, but so is consumer gratification.
The word revolution isn’t used lightly, so when we are told that we are in the midst of Industrial Revolution 4.0, we can expect to see major changes—especially in that most fundamental of industries, banking. Providing guidance to their 33,000 strong membership, in the midst of the upheaval, is the UK’s Chartered Banker Institute, which through multiple avenues is preparing bank professionals, current and future, to serve their customers well during the transformation.
Banks are a mixed bag when it comes to utilising technology’s full potential: some are taking full advantage while some are trying, and often struggling, to apply technology to their existing businesses.