PSD2 & The Future of Digital Banking Bragi Fjalldal, CMO & VP Business Development
About Meniga Meniga is helping leading banks around the world personalize their digital customer experience CONTINENTS COUNTRIES OFFICES CONSUMERS EUROPE NORTH AMERICA ASIA AUSTRALIA AFRICA 18 LONDON 43 MILLION REYKJAVIK STOCKHOLM +30 clients across 18 countries
Meniga s Products & Services Digital Banking Products Marketing Products DIALOG ENGAGEMENT PLATFORM PERSONAL FINANCE BUSINESS FINANCE CARD-LINKED OFFERS CONSUMER DATA ANALYTICS DATA CONSOLIDATION & ENRICHMENT Account Aggregation PSD 2
Agile FinTechs put pressure on banking profit pool Global Fintech Investment (USD B) 25 20 Payments 15 Lending 10 Wealth 5 Other 0 2010 2011 2012 2013 2014 2015 Source: Accenture; Bain & Company; Forbes; McKinsey; Meniga analysis In consumer finance up to 40% of revenues and 60% of profits are at risk of loss by 2025 McKinsey Global Retail Banking, 2015
Digital banking is an increasingly crowded space Source: CB Insights
However, GAFAs are the biggest immediate threat Customer dis-intermediation is one of the biggest risks retails banks face today
and now PSD2 is set to accelerate competition PSD2 is paving the way for consumers to authorize 3rd party providers to have direct access to two aspects of their bank account Access to account and transaction data Ability to authorize payments directly from account 1 2 Account Information Service Providers (AISP) Payment Initiation Service Providers (PISP)
There is time, but it takes time to prepare well Jan/2016 Jan/2017 Jan/2018 Sept/2018- March/2019 2016 2017 2018 2019 2020 PSD2 enters into force, 20 days after publication European Banking Authority provides draft of PSD2 Regulatory Technical Standards EU Commission will take 3-9 months to approve standard EU member states will have 2 years to transpose legal text into national law Once EU commission adopts PSD2 Technical Standards, there is an 18 month period for industry to implement Source: European Banking Authority; Openbankproject
PSD2 is not just a threat it is also an opportunity Can banks transform the relationship with their customers from monthly chores to weekly or even daily meaningful dialog?
PSD2 : Banks must prepare to comply & compete PREPARE TO COMPLY Prepare IT architecture for dealing with real-time third party access to account data & payments; do the groundwork well before standards are finalized develop and test your API in good time PREPARE TO COMPETE Develop market-leading post-psd2 products and services ahead of your competitors use your API to bring innovative personalized digital banking solutions to market as soon as you can
PSD2: Banks have several strategic options Strategic Options (not mutually exclusive) Bank as back-end service provider Bank owning & expanding customer relation Basic Compliance Become the best OpenAPI provider Provide the best digital banking UX Expand ecosystem beyond banking Comply with barebone PSD2 requirements Enable 3 rd party access as required by law Prepare to Comply Prepare to Compete Develop advanced API platform with granular & more enriched data access (e.g. standing orders, demographics, market data analytics) Monetize access to data & build close relationships with AISP/PISPs Source: Accenture; OpenBankProject; PWC; Meniga analysis Defend position as leading channel to integrated financial services Improve existing offerings & develop new services based on enriched, aggregated data to address unserved financial needs (e.g. PFM & BFM) Compete with TPPs Develop data platform connecting banks, merchants and consumers Expand service offering to nonfinancial products/ services in partnership with TPPs with potential for new revenue streams (e.g. CLO, real-time market intelligence)
PSD2: How Meniga products & services can help Strategic Options Bank as back-end service provider Bank owning & expanding customer relation Basic Compliance Become the best OpenAPI provider Provide the best digital banking UX Expand ecosystem beyond banking DATA CONSOLIDATION & ENRICHMENT PSD2 API CONSUMER DATA ANALYTICS PERSONAL FINANCE CARD-LINKED OFFERS BUSINESS FINANCE CONSUMER DATA ANALYTICS Digital Banking Products Marketing Products DIALOG ENGAGEMENT PLATFORM CARD-LINKED CONSUMER DATA OFFERS ANALYTICS PERSONAL FINANCE BUSINESS FINANCE ACCOUNT AGGREGATION DATA CONSOLIDATION & ENRICHMENT Account Aggregation PSD 2
PSD2 & Meniga : One-Stop compliance & innovation Step 1: Prepare for XS2A compliance CARD-LINKED OFFERS PERSONAL FINANCE CONSUMER DATA ANALYTICS BUSINESS FINANCE Consolidate transaction & account data in Meniga repository outside of core-banking systems Establish efficient synchronization process (batch/pull/push) Optimize data for single-user queries Meniga willing to establish & maintain API based on local regulation once available PSD2 API DIGITAL INNOVATION API Single-source transaction database serving PSD2/XS2A API DATA ENRICHMENT Core banking system shielded against Denial of Service (DOS) attacks Rapid response times : avg response time <100ms per request; max response time <1s DATA CONSOLIDATION Proven scalability largest deployment covers 10m+ digital banking customers
PSD2 & Meniga : One-Stop compliance & innovation CARD-LINKED OFFERS PERSONAL FINANCE PSD2 API CONSUMER DATA ANALYTICS BUSINESS FINANCE DIGITAL INNOVATION API Step 2: Enrich & augment data to form competitive innovation platform Enrich data beyond regulatory requirements : categorization, merchant mapping, location mapping, etc Add more data to Meniga repository, e.g. standing orders/direct debits, loan products, savings products, etc Expand API to encompass broader functionality DATA ENRICHMENT DATA CONSOLIDATION
PSD2 & Meniga : One-Stop compliance & innovation CARD-LINKED OFFERS CONSUMER DATA ANALYTICS Step 3: Build on innovation platform to enhance proposition to personal & SME customer base PERSONAL FINANCE BUSINESS FINANCE PSD2 API DIGITAL INNOVATION API DATA ENRICHMENT DATA CONSOLIDATION Invoke Meniga PFM & BFM services to build world-class, personalized UX for personal & SME customers Dramatically improve quality & quantity of engagement Activity feed, reports/insights, challenges, cash-flow management, etc
PSD2 & Meniga : One-Stop compliance & innovation CARD-LINKED OFFERS CONSUMER DATA ANALYTICS Step 4: Expand data platform connecting banks, merchants and consumers PERSONAL FINANCE BUSINESS FINANCE PSD2 API DIGITAL INNOVATION API DATA ENRICHMENT DATA CONSOLIDATION Partner with Meniga to offer personalized Card-Linked Offers to personal banking customers & transaction based market analytics to corporate customers Develop tangible value to customers & new revenue streams for bank
Competing after PSD2 : value from financial data Personalized Digital Banking (PFM) Targeted Card-Linked Offers (CLO) Data-driven SME banking (BFM) Real-Time Market Intelligence Transform Customer Engagement Develop New Revenue Streams
Competing after PSD2 : Personalized Digital Banking Partner with service providers to develop powerful innovation platform Differentiate in functionality and digital user experience Examples of digital banks powered by Meniga s digital innovation platform
Competing after PSD2 : Personalized Digital Banking Meaningful engagement based on highly personlized financial advice & services An environment that facilitates continuous dialog with the customer Notification-driven engagement mixing core banking with personal finance advice, advanced PFM functionality and offers
Automated, notification driven PFM Notification of unusual spending & low-balance warnings Personal finance insights Insightful expense reports Foursquare-like info nuggets on spending behavior Playful savings challenges Personalized offers
Competing after PSD2 : Data-driven SME Banking Compelling digital banking environment for SMEs : consolidated accounts and overview of income & expenses Help customers improve cash conversion cycle through automated cashflow management and peer comparison
Competing after PSD2 : Card-linked offers Use data to source highly personalized, deep offers Card-linked infrastructure secures seamless execution and opportunities for positive engagement Potential to develop significant, new revenue stream for banks
Competing after PSD2 : Card-linked offers Metrics from Meniga s CLO program 20% average discounts Offers across 15 verticals 5-10% offer conversion rates x3 more engagement from active offer users 10 ARPU (Average Revenue Per User/annum)
Competing after PSD2 : Real-time market intel Unique and disruptive strategic marketing toolbox Real-time market share tracking against competitors - down to store level Cross-competitor spend profile analysis & demographic segmentation
Meniga can help : PSD2 competitiveness roadmap 6 months 12 months 18 month 24 months PSD2/XS2A Compliance Consolidation of transaction & financial product data separate from core banking systems Optimize data for fast-query & advanced analytics Expand data enrichment & API for internal & external innovation Extend API for mandatory compliance Personalized Digital Banking Enriched financial data integrated with everyday banking UX/UI inspired by best-ofbreed social media applications Focus on meaningful engagement Advanced, personalized data-driven features - Activity Feed - Spend reports - Challenges - Peer comparison - Net worth - Cash-flow mgt Example PSD2 Competitiveness Roadmap built on Meniga s Innovation Platform Card-Linked Offers Personalized cardlinked offers integrated with everyday banking Redefine the meaning of loyalty programs New source of revenue Real-time business intel Ground-breaking business intel toolbox Real-time market share development Store-level analytics New source of revenue SME Banking SME banking portal with powerful cash-flow mgt
Our advice on reacting to PSD2 : Summary Tackle PSD2 head-on : step up your game - go beyond compliance to defend the relationship to your customers Be bold in use of data : use personal financial data to deliver value to your customers before others beat you to it Work with agile FinTechs : use the FinTech community to help elevate to excellence in non-core activities Learn from the best in UX/UI : avoid re-inventing the wheel apply best practice to your own platforms Get moving ASAP : The clock is ticking make a plan and start executing as soon as possible
Making digital banking personal We help banks build meaningful customer engagement and develop new revenue streams For more information visit www.meniga.com Or contact us at sales@meniga.com Meniga Ltd. WeWork, 3 Waterhouse Square 138 Holborn, EC1N 2SW London, United Kingdom