A customer’s banking journey ranges from onboarding to transacting and account maintenance. With the increasing demand for digitalization, consumers urge hassle-free, frictionless banking services. To fulfill the user requirements, banks need to improve the security of payments for them, while maintaining ease of online transactions.
The implementation of PSD2 could be a crucial moment for banks in Europe in defining the customer journey. The directive could disrupt the banking industry by bringing innovation and transparency while enhancing security in online payments.
Let’s take a closer look at how PSD2 can push the transformation of customer experience in the banking industry:
Secure online payments
SCA or Strong Customer Authentication is a major component of PSD2 that adds an extra layer of protection in online transactions. The aim of SCA is to reduce the chances of payment frauds and enhance security by introducing a two-factor authentication system. The system requires the customer to provide two out of three authentication factors for the transaction to be approved.
- Knowledge – Something a user knows, such as a password or PIN
- Possession – Something a user has, such as a device or a card
- Inherence – Something a user is, such as biometrics or a fingerprint
Adding an extra layer of protection could mean increased friction in the payments and inconvenience for some users. However, PSD2 has the potential to make online transactions between accounts quick and convenient.
Innovative ways to manage finances and accounts
PSD2 regulation is all about bringing innovation and competition in the finance market while keeping customers at the receiving end. The new directive could enable both customers and businesses to manage money in a more convenient way with a wide array of choices. Customers will be able to avail financial services such as expenditure analysis, bill payment, or making online transfers from different providers.
With PSD2, consumers will be able to get a complete view of all their bank accounts directly on a single screen. They will be able to avail a unified view of their current financial services as well as bank account history.
Personalized services and added convenience
With PSD2, TPPs can compile the key bank data, including income history, payment analysis, etc. to get a 360-degree view of the customers’ bank accounts. After that, they will be able to offer customers personalized products and services built on the financial data shared by banks. Customers will receive relevant financial suggestions and offers, such as lucrative investments, loan offers, and cashback. It could be a great effort by TPPs to enhance the user experience.
