Antti Lemberg, Laura Petschnig, Paul Cullum, and Phil Sneade from Frontier’s Financial Services team, presented today at the MoneyLIVE Retail Banking Summit 2018 to a diverse audience from the banking and fintech community across Europe. The team discussed how the different sources of value in European retail banking markets will be potentially affected by PSD2, and how behavioural economics and customer psychology provide a powerful lens to understand how the impact of PSD2 is likely to play out.
As PSD2 implementation gets underway across Europe, bold claims are often made by industry commentators about the degree to which PSD2 may disrupt retail banking markets, with the disruption caused either by new fintech start-ups or more established technology businesses.
The presentation highlighted how there are many well-known examples from markets where significant digital disruption has taken place, and existing customer relationships appear to be genuinely threatened. But equally, incumbents would argue that retail banks have faced many threats over time, including recently from digital entrants, and that the technology underpinning the new PSD2-enabled services is relatively simple and appears to be easily replicable.
Predicting the future is fraught with difficulty. Ultimately, the level of market disruption from PSD2 is likely to depend on the extent to which customers are willing to embrace exciting new providers and services, or whether they decide that on balance they prefer to stick with the trusted reputations of their existing banks (who may offer similar products and services).
The conclusion of a lively debate at the conference was that it will be essential for existing providers and new entrants alike to understand their customers in order to design strategies for responding to PSD2 and to monitor how successful these are as implementation gathers pace.
Frontier regularly advises clients across Europe on behavioural economics in the financial services and retail markets, focusing on banking regulation and commercial strategy.
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