PSD2 & The Future of Digital BankingBragi Fjalldal, CMO & VP Business Development
About Meniga
Meniga is helping leading banks around the world personalize their digital customer experience
CONTINENTS COUNTRIES OFFICES CONSUMERSEUROPENORTH AMERICAASIAAUSTRALIA
18 LONDONREYKJAVIKSTOCKHOLM
35 MILLION
AFRICA
+30 clients across 18 countries
Meniga‘s Products & Services
DATA CONSOLIDATION & ENRICHMENT
PERSONAL FINANCE BUSINESS FINANCE
DIALOG ENGAGEMENT PLATFORMCARD-LINKED
OFFERSCONSUMER DATA
ANALYTICS
Digital Banking Products Marketing Products
PSD 2AccountAggregation
Agile FinTechs put pressure on banking profit pool
Source: Accenture; Bain & Company; Forbes; McKinsey; Meniga analysis
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015
Global Fintech Investment (USD B)
“In consumer finance up to 40% of revenues and 60% of profits are at risk of loss by 2025 ”
McKinsey Global Retail Banking, 2015
Payments
Lending
Wealth
Other
Source: CB Insights
Digital banking is an increasingly crowded space
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 account1 2
Account Information Service Providers (AISP)
Payment Initiation Service Providers (PISP)
There is time, but it takes time to prepare well
2016 2017 2018 2019 2020
Jan/2016 Jan/2017 Jan/2018 Sept/2018-March/2019
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 COMPLYPrepare 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 COMPETEDevelop 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
Basic Compliance
• Comply with bare-bone PSD2 requirements
• Enable 3rd party access as required by law
• 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
• Develop data platform connecting banks, merchants and consumers
• Expand service offering to non-financial products/ services in partnership with TPPs with potential for new revenue streams (e.g. CLO, real-time market intelligence)
Strategic Options (not mutually exclusive)
Become the best OpenAPI provider
Expand ecosystem beyond banking
• 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
Provide the best digital banking UX
Bank as back-end service provider Bank owning & expanding customer relation
Source: Accenture; OpenBankProject; PWC; Meniga analysis
Prepare to Comply
Prepare to Compete
PSD2: How Meniga products & services can help
Strategic Options
Bank as back-end service provider Bank owning & expanding customer relation
DATA CONSOLIDATION & ENRICHMENT
PERSONAL FINANCE
BUSINESS FINANCE
CARD-LINKED OFFERS
CONSUMER DATA ANALYTICS
DATA CONSOLIDATION & ENRICHMENT
PERSONAL FINANCE BUSINESS FINANCE
DIALOG ENGAGEMENT PLATFORMCARD-LINKED
OFFERSCONSUMER DATA
ANALYTICS
Digital Banking Products Marketing Products
PSD 2AccountAggregation
ACCOUNT AGGREGATION
Basic Compliance Become the best OpenAPI provider
Expand ecosystem beyond banking
Provide the best digital banking UX
CONSUMER DATA ANALYTICSPSD2 API
PSD2 & Meniga : One-Stop compliance & innovation
DATA CONSOLIDATION
PSD2 API DIGITAL INNOVATION API
PERSONAL FINANCE BUSINESS FINANCE
CARD-LINKED OFFERS
CONSUMER DATA ANALYTICS
DATA ENRICHMENT
Step 1: Prepare for XS2A compliance• 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
ü Single-source transaction database serving PSD2/XS2A API
ü Core banking system shielded against Denial of Service (DOS) attacks
ü Rapid response times : avg response time <100ms per request; max response time <1s
ü Proven scalability – largest deployment covers 10m+ digital banking customers
DATA CONSOLIDATION
PSD2 API DIGITAL INNOVATION API
PERSONAL FINANCE BUSINESS FINANCE
CARD-LINKED OFFERS
CONSUMER DATA ANALYTICS
DATA ENRICHMENT
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
PSD2 & Meniga : One-Stop compliance & innovation
DATA CONSOLIDATION
PSD2 API DIGITAL INNOVATION API
PERSONAL FINANCE BUSINESS FINANCE
CARD-LINKED OFFERS
CONSUMER DATA ANALYTICS
DATA ENRICHMENT
Step 3: Build on innovation platform to enhance proposition to personal & SME customer base
• 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
DATA CONSOLIDATION
PSD2 API DIGITAL INNOVATION API
PERSONAL FINANCE BUSINESS FINANCE
CARD-LINKED OFFERS
CONSUMER DATA ANALYTICS
DATA ENRICHMENT
Step 4: Expand data platform connecting banks, merchants and consumers
PSD2 & Meniga : One-Stop compliance & innovation
• 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
TargetedCard-Linked Offers(CLO)
Personalized Digital Banking (PFM)
Data-driven SME banking (BFM)
Real-Time Market Intelligence
Transform Customer Engagement
Develop New Revenue Streams
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
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 cash-flow 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
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)
Metrics from Meniga´s CLO program
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
Card-Linked Offers
Personalized Digital Banking
Real-time business intel
SME Banking
Example PSD2 Competitiveness Roadmap built on Meniga´s
Innovation Platform • 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
• Enriched financial data integrated with everyday banking
• UX/UI inspired by best-of-breed social media applications
• Focus on meaningful engagement
• Advanced, personalized data-driven features- Activity Feed- Spend reports- Challenges- Peer comparison- Net worth- Cash-flow mgt
• Personalized card-linked offers integrated with everyday banking
• Redefine the meaning of loyalty programs
• New source of revenue
• SME banking portal with powerful cash-flow mgt
• Ground-breaking business intel toolbox
• Real-time market share development
• Store-level analytics• New source of revenue
Our advice on reacting to PSD2 : Summary
Learn from the best in UX/UI : avoid re-inventing the wheel –apply best practice to your own platforms
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
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”
Meniga Ltd.Level 42One Canada SquareLondonE14 5ABUnited Kingdom
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