PSD2: New Horizons in Personal Financial Management

PSD2: New Horizons in Personal Financial Management
June 28, 2018 Krisztian Toth

If we agree that the role of sales reps in financial services is transforming with the spreading of online services and that it becomes more of a consultancy in making decisions in complex problems that require a longer process than we have to reconsider what tools we use for this purpose. PSD2 now allows for brand new ones to try. 



When above all that a new regulation appears on the market, many sales leaders tend to think that it is only another nuisance they have to comply with. In other cases, they might think it is none of their business after all. However, a significant part of the regulations are created as a reaction to changing demand, and no sales leader can ignore these changes.

For example, the freshest version of the European Payment Services Directive, or PSD2, in effect since January 2018, reacts to the demand of financial services customers who want to take advantage of the single market by using even more and more secure services. They expect the service providers to increase transparency and give the control of user data into the users’ hand.

The most important consequence of implementing PSD2 was that it cleared the way to the so-called Account Information Services Providers (AISPs) and Payment Information Service Providers (PISPs). These service providers connect the financial institutions and the clients as a third party and develop new solutions for the financial industry, mostly by offering an easy overview for the clients of their existing assets and credits at the different accounts in different institutions.

One of the primary goals of PSD2 is that these third parties that are handling sensitive data and offering services on the market anyway, were kept accountable and under stronger control. Already in January, many fintech startups registered as AISP or PISP, according to the directive. The most well-known aggregators are probably Consents Online and API-developer Truelayer but the list is growing almost by the day.

The new regulation also stimulates market competition among current and new players. Thanks to the new services, pricing structures, conditions lists, and the client management of different financial institutions are becoming more transparent. This is a call to action for the incumbents. Not only should they passively provide data or access to their systems but also develop innovative solutions.


What Does the Client Want?

Shortly after the publication of the directive, between February and June 2016, Accenture conducted a survey with the participation of 800 clients using online banking or payment services. The survey provides an important insight into the initial reactions of clients to the directive.

The analysis highlights three major factors: trusted brands are better accepted as AISPs, the different approach to the management of banking data and other personal data, and the fact that the age and the number of accounts are strongly correlated to the likeliness of trusting the new services.

Putting it simply:

  • The clients expect mostly (65%) traditional banks as AISPs, and the trust in these institutions serves as a base for sharing other account information, but 40% would also trust well-known online retailers.
  • However easily people share their personal data on different forums, they consider financial data more sensitive and, therefore, 70% would not trust them to a third party outside of the banking environment.
  • The attitude towards AISPs is defined by several other factors as well. Interestingly, the more accounts someone has in different places, so there should be a motivation to use aggregators, the less likely they would try one. Attitudes are also characterized by age: 52% of those between 55-64 said they would not trust a third party, while only 15% of those between 18-24 years said the same.


How Should Banks Keep Up In This Competition?

As shown above, banks should not only the threat but also the opportunity in PSD2 as their established brands and the sense of trust that comes with it could be a perfect base for the implementation of new services.

The banks that go beyond passive data transfer to third parties and make an effort to develop new solutions within the redefined framework will be the winners of this game.

Such a new solution could be, for example, a functionality built in a mobile application that could map the client’s financial situation with the input of only one account number, suggest products, and create an opportunity for further planning. This could provide useful data not only for the client but also for the bank: how the client uses his or her assets at other institutions, what services does he or she use and how often.


How Does PSD2 Relate to the Sales Reps’ Job?

In creating the currently applied sales strategies, one fact played a major role: namely, that a particular financial service provider could only work based on their own data and some unconfirmed information shared by the client when providing assessment and personal financial management services.

However, digitalization, mobile devices, and other consumer services motivate clients to want to manage their financials in an easier, more transparent way. Addressing this new demand is a range of new technology companies entering the market every day.

In this environment, in-house retail banking sales reps have a huge opportunity literally at hand. Terminals and mobile devices are already in use at many financial institutions, and the applications installed on these devices are helping sales reps and clients to assess the current financial situation, the accessible services, and future planning.  

If these (mobile) applications have integrated aggregator functions, they can support the rep in every sales situation. When the client gives the green light to access his or her data (bank account numbers, the institution can see what financial assets he or she possesses, or what loans or other outstanding debts does the client have, and can even find data regarding other pieces of assets, such as real estate.

It doesn’t work without strong trust but also has its advantages for the client. The first step of the consultation, the assessment, will be significantly shorter, the client doesn’t have to fill out even a short form, the answers to the usual questions will automatically be extracted from the account data to the application. That flow of data can be controlled by both parties during the personal meeting. By automating that important step, the administration becomes faster.

An even bigger advantage of such a function is that it opens new horizons in personal financial management. Using the initial assessment as a starting point, an improved AISP is able to use, for example, with artificial intelligence, to use the gathered data for recognizing patterns and suggest solutions to the clients to reach their financial goals in the future while also reducing risks.

Prudent financial management has always included getting to know the client as much as possible, including exploring his or her financial situation, risk-tolerance, and other circumstances (family, health, etc.). Technology now gives an opportunity to do the same but supported by facts and data and presented in a way it is easy to overview and control for the client.


Keep up with the financial tech and compliance news – Sign up for our bi-weekly newsletter: