PSD2 & The Future of Digital Banking · PDF filePSD2 & The Future of Digital Banking ......

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 CONSUMERS
EUROPE
NORTH AMERICA
ASIA
AUSTRALIA
18 LONDON
REYKJAVIK
STOCKHOLM
43 MILLION
AFRICA
+30 clients across 18 countries

Menigas Products & Services
DATA CONSOLIDATION & ENRICHMENT
PERSONAL FINANCE BUSINESS FINANCE
DIALOG ENGAGEMENT PLATFORM
CARD-LINKED
OFFERS
CONSUMER DATA
ANALYTICS
Digital Banking Products Marketing Products
PSD 2Account
Aggregation

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 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
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
PERSONAL FINANCE
BUSINESS FINANCE
CARD-LINKED
OFFERS
CONSUMER DATA
ANALYTICS
DIALOG ENGAGEMENT PLATFORM
CARD-LINKED OFFERS
CONSUMER DATA ANALYTICS
Digital Banking Products Marketing Products
PSD 2Account
Aggregation
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
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
Single-source transaction database serving
PSD2/XS2A API
Core banking system shielded against Denial of
Service (DOS) attacks
Rapid response times : avg response time

DATA CONSOLIDATION
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

DATA CONSOLIDATION
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

DATA CONSOLIDATION
CARD-LINKED
OFFERS
CONSUMER DATA
ANALYTICS
DATA ENRICHMENT
Step 4: Expand data platform connecting banks, merchants and consumers
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
Targeted
Card-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 Menigas
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 behavi

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