Market Report, Q1 2018

Transcription

1 AUKA

2 AUKA PSD2: Turning compliance into opportunity

3 3 _ Contents Contents _ Who is Auka? _ What is PSD2 _ European banker perception: an overview of key findings _ Compliance --> Opportunity _ The window of opportunity _ The cost of innovation _ Get connected _ Get in touch

4 4 _ Who is Auka? Who is Auka? Founded in 2010, Auka are mobile payments pioneers. They are the technology company behind mcash, the first mobile payments platform to launch in Norway. Since then, the Nordics have enjoyed the highest rates of mobile payment adoption in the world. norway sweden Denmark

5 5 _ Who is Auka? Auka was named as the fastest growing fintech company by Deloitte Fast 500 EMEA and was cited as one of the hottest 16 Nordic fintech startups by Business Insider. It was also named mobile payments platform of the year by CFI magazine and was included in the European Fintech Awards top 100 in In February 2014, Auka went direct to consumers, launching mcash in the Norwegian market and quickly amassed hundreds of thousands of users. In October 2015, the Sparebank 1 collective in Norway acquired the licensing rights for the mcash product and name. In April 2016, Auka pivoted their model. It launched its services and products on a B2B white-label platform, enabling banks to benefit from both the Auka technology and the know-how accumulated over several years as a digital channel pioneer.

6 6 _ Who is Auka? Auka s white-label mobile payments and digital channel products support banks customer acquisition and revenue generation efforts. These products are delivered using the Software-as-a-Service (SaaS) model. Auka has an e-money license, is PCI compliant and is fully FSA approved. They were also the first licensed financial services company to run entirely on the Google Cloud Platform, later followed by tier 1 bank, HSBC. Auka specialises in mobile payment services that allow users to pay with their smartphone, using their preferred source of funding in any payment scenario.

7 7 _ Who is Auka? Product modules Delivered as flexible components via a software development kit (SDK) or Auka white-labelled product interfaces. P2P (PERSON TO PERSON) p2m - digital cash Auka s mobile payments platform has been integrated by 18 Scandinavian banks. It was one of the core technologies in the establishment of the mobile payments cooperation initiative of 107 banks in Norway in August Auka specialises in mobile payment services that allow users to pay with their smartphone using their preferred source of funding in any payment scenario, agnostic to either the payment device or the bank. p2m - preorder payments p2m - integrated payments Its Peer-to-Peer (P2P) mobile payments platform can be configured to allow individuals to make fast, personal payments using a number of different identifiers including mobile phone numbers, bank account numbers or social media profiles. identity credit and lending Auka s Peer-to-Merchant (P2M) mobile payments platform enables retailers and SMEs to offer customers the option to pay for goods and services using their mobile phone.

8 8 _ Who is Auka? Auka s core platform provides an API catalogue for banks needing to meet PSD2 requirements. They also get the benefit of becoming a PISP (payment initiation service provider) and an AISP (account information service provider). Auka enables banks to use its features to make their own channels better. When PSD2 APIs open up, Auka will aggregate and integrate them into its customers channels.

9 9 _ What is PSD2? What is PSD2? The second payment services directive (PSD2) regulations, which must be enshrined in law by all EU member states by 13 January 2018, require financial institutions and PSPs (payment service providers) to make a number of changes. The most significant of these changes is that those operating in these markets are compelled to expose compliant, open APIs.

10 10 _ What is PSD2? PSD2 COMPLIANCE PSD2 API API MGMT Check compliance box. Account / payments APIs ready. OPEN BANKING Marketplace TPP portal Extended API Catalogue Seek help from would-be-competitiors. Pick, curate and connect with trusted TPPs. White-label or co-brand services at own discretion. CHANNEL Mobile Payments PFM Build user base and frequency of use in new powerful channel. Combine own TTP and new services in a compelling user proposition. AGGREGATE IN CHANNEL Aggregation Enhance channel by aggregating. Become PISP / AISP. WIN EYEBALLS

11 11 _ What is PSD2? This new directive is undoubtedly the largest shake-up the payments industry has faced in many years. Put it this way, for 99% of bankers at the top of their game today: this is the biggest change they ll face in their entire careers. Yes, even bigger than internet banking. PSD2 aims to bring banking into the age of right here, right now by increasing competition and thus, innovation. This is a directive for the people as it means a greater slew of choice, better services and enhanced security and protection measures.

12 12 _ European banker perception (and why it needs to change) European banker perception (and why it needs to change) Auka recently commissioned independent research where they asked 1,500 senior bankers from across 15 EU regions a series of questions about their PSD2 knowledge, concerns and strategies. While an average of 82% had a plan in place for PSD2 compliance, more than two in five (42%) said they felt worried about the possible effects of PSD2 on their banking organisation. With PSD2 heralding the greatest payments shake-up basically all banks have ever faced, it would be safe to assume that there d be a certain acceptance of the need for organisational change. Right? Well, surprisingly, two-thirds of all bankers surveyed said that they did not believe their workplace would have to adapt or shift its model significantly in order to stay relevant, post-psd2. Further, a whopping three quarters (in fact, a little more: 76%), of those surveyed said they didn t think their roles would have to change at all.

13 13 _ European banker perception (and why it needs to change) Key findings PSD2 Research* 76% 32% 42% are aware of the PSD2 and RTS timelines still researching how to become PSD2 compliant worried about PSD2 effect on their organisation 76% don t believe their individual roles will need to change 26% worried that outside threats will take the role of the bank within five years 35% expect a fundamental shift in banking over the next five years 66% see as positive to become PSD2 compliant ASAP 66% don t think bank will have to adapt in order to stay relevant *LM Research & Marketing Consultancy

14 14 _ Compliance --> Opportunity Compliance --> Opportunity In the last section, the threat of disruption should a bank choose to simply comply alone with PSD2 was spelled out. If it looked gloomy, never fear - there is good news ahead. Look at compliance like this: simply ticking the right boxes and ensuring their APIs are exposed puts a bank on the same footing as every other bank. Any licensed third-party (including other banks) can exploit the newly opened APIs to their own advantage. At the start, it won t matter as the customers still have their accounts and their money with the bank. But in time, the bank starts to miss out on any associated payment revenue and thus the daily interactions with their customers. Not just this, but gone too are the opportunities to market and upsell to that customer at the most opportune times. The data will be better than ever before but it will be generated and utilised in the interfaces operated by others. The customer is using third-party apps for everything. They have no reason to go into their mobile banking app. The saying out of sight, out of mind couldn t be truer in this circumstance. So, what can a bank do about this? Well, firstly, don t panic.

15 15 _ Compliance --> Opportunity Banks have an 18-month advantage (detailed in the next section) and can create channels that their customers need, want and will love prior to having to hand over the keys. These channels include mobile payments built around the ability to pay and get paid by anyone in any circumstance. Built and launched correctly, it means that when the time comes, the customer (and all the new customers acquired through these competitive new channels) don t feel as strong of a pull to use a competing product from a third-party they don t trust as much. Saturation of the market is key. Although this is a huge part of it, it s not simply about retaining relevance and existing customer attention. The largest opportunity banks in Europe have right now is to grow their customer share and make money from new digital channels, before the PSD2 regulatory technical standards (RTS) deadline of September Those waiting to enter the market know the monetary potential of a post-psd2 world. Facebook has messenger payments, Google s already launched a P2P mobile wallet in India and Apple will use the imessage functionality as its core P2P payments platform. Why would these tech giants be investing so heavily in channels to take payments away from the banks and the card companies if there wasn t any financial benefit?

16 16 _ Compliance --> Opportunity No bank-issued mobile payment solutions apart from those deployed in Scandinavia, have ever produced any revenue for the bank. An NFC solution simply replicates existing payment methods. Further, it does not give merchants or banks any insights into consumer behaviour/purchase patterns. Mobile payments done right give banks an unparalleled insight into what consumers are spending, how and when. They can see like never before how merchants are performing. There are multiple cross-sell opportunities for both everyday members of the public and merchants using the mobile payments channel. When the solution is available to all members of the public regardless of which bank they ordinarily use, the bank also has the opportunity to expand its customer base. Mobile payments done right give banks an unparalleled insight into what consumers are spending, how and when.

17 17 _ Compliance --> Opportunity Secure new revenue channels Mobile payments are an enabler for multiple new revenue streams Transaction revenue from day one Person to Person Person to Merchant Expand commercial territory and monetise value-added services Expand payment offering PreOrder payments Invoice payments Recurring payments POS payments Online payments Up-sell other financial services Credit & lending Savings Investments Financial advice Merchant services Loyalty programs Customer insight & market analysis Customer engagement In-app offers

18 18 _ Compliance --> Opportunity We know that the eyeballs (the attention and use of a product) of customers = revenue. Once a bank has built and controlled a payments channel for millions of customers individuals, small merchants and larger retailers, they have the best and cheapest sales channel at their disposal. If they decide to sell traditional bank products and offer interesting real-time credit options, that s up to them, but the customer acquisition cost in this circumstance cannot be beaten. That is exactly why the technology and media giants are building their proposition, even if they believe payments will become commoditised and ultimately free. Own the channel and the eyeballs and you can monetise it even when the channel itself was initially expensive to build and run. The window of opportunity has been cranked open for banks. For now. Read on.

19 19 _ The window of opportunity The window of opportunity PSD2 comes into effect 13th January Banks don t have to comply with the regulatory technical standards (RTS) on strong customer authentication (SCA) and common communication by then, though. They have 18 months after the finalisation of RTS (which is estimated to be around September 2019) to comply. This gives banks 18-months before they have to expose PSD2 interfaces to third-parties. Google, Facebook and Apple have already launched payment solutions that can be introduced to the European market once they have API access. What this means, in a nutshell, is that banks in Europe have an 18-month head start on the tech giants wanting to re-direct the public s attention to their own digital channels.

20 20 _ The cost of innovation The cost of innovation Many bankers we speak to cite prohibitive-costs as a barrier for change. Innovation doesn t have to cost the earth and the longer-term revenue benefits will far outweigh initial outlay. Typically, the project lead doesn t even need to ask for a budget. Auka offers proof of concept (PoC) solutions, tailored to your requirements, at minimal cost. Test fast at a low cost. Most vendors have no first-hand experience in launching a mobile payment solution to market. Auka has.

21 21 _ The cost of innovation As a startup with limited budget, Auka successfully launched a mobile payments solution direct to market and quickly gained a lot of traction. This was in a market where mobile payments were a brand new concept. The product was such a success that Norway s largest bank, DNB, quickly followed up by launching their own solution backed by an unprecedented marketing budget. We have the experience and know how under our belt, combined with a comprehensive understanding of the market. Spending a lot of time on learning, developing and forming a marketing strategy isn t required. We have the blueprint based on previous success for the bank to take, adapt and run with. We have done it before and can provide a step-by-step toolbox for launching in your region, including a breakdown of anticipated costs and revenues.

22 22 _ Get connected Get connected The thought of building individual PSD2 connections to all competitors can be overwhelming. Auka has the license and technology in place to deliver both account aggregation and payment initiation as an all in one service. So when the APIs of other banks become available, we can plug them into your channel, giving your customers the experience they expect. 42% of surveyed bankers (1,500 bankers across 15 European regions) say they re worried about the effect PSD2 will have on their organisation.

23 23 _ Get connected Why does it work for everyone? What is the magical mobile payment recipe that has transformed markets? flexible funding flexible spending Bank account direct debit with balance paying friends with phone numbers payment card card from any issuer paying merchants with merchant number post paid credit account paying merchants online and with qr codes installments credit agreement paying merchants inside popular apps pre-paid stored value account shopping from merchants browsing the marketplace

24 _ Get in touch Do you want to know more about how Auka could help your bank get ready for PSD2? Get in touch Web: auka.io/contact-us Phone: