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September 22, 2021 - Claire Zhou

PSD2: A Gateway to Customer-Centric Financial Services

For banks making the leap into digital transformation, the customer experience must be at the heart of every decision. No one knows this better than traditional banks, as more customers express interest in fintech and migrate toward mobile or online-only banking. 

Success in today’s banking industry is about understanding consumer preferences and catering to their evolving needs. Today’s banking customers want to feel empowered to take control of their finances. They crave the convenience of being able to bank on their own terms and not be limited by friction, all without giving up the feeling of security and privacy.

To deliver on evolving customer expectations, banks, fintechs, and merchants alike must start exploring the concept of open banking and how all parties can work together to take care of a shared customer base.

The Growing Need for Customer-Centric Banking

Open banking is quickly becoming synonymous with customer-centric banking. The practice allows third-party financial service providers open access to bank customers’ data, transactions, and banking history. This information is shared via APIs that connect banks with non-bank financial services. 

The link between open banking and customer-centricity is flexibility. When more is known about a customer’s preferences, payment histories, and general needs, financial services can be tailored to their needs. Stronger relationships can be forged. And most importantly, banks can start to regain trust and respect that is typically eroded with unfair fees, lackluster products, data breaches, and high-friction experiences.

PSD2: The Linchpin of Open Banking

PSD2 is a new set of guidelines in the EU that is helping open banking to take flight. The concept blends open banking with strong customer authentication (SCA) as a means of fraud prevention without friction. Through PSD2, data sharing can happen more freely between financial partners without the traditional risks of fraud.

One of the goals of PSD2 is to support customer-centric banking by improving market access for smaller providers. Paired with the SCA element, consumer privacy remains protected, prevents fraud early, and improves transaction trust, even when typical security hurdles are not present. 

What PSD2 Means for Banks, Fintechs, and Merchants

The benefits of open banking are multifold, aiming to create win/win solutions for traditional banks, fintechs, merchants, and their customers. Because traditional banks are historically slower to evolve and adopt new technologies, third-party fintechs can help to fill this gap. In turn, fintech companies can tap into the trust and scope traditional banks still hold in the financial services industry. Merchants are able to access a broader service offering to reduce friction for their customers. 

At the intersection of these three parties are the users who benefit from an expanded range of financial service options. They don’t know the steps taken behind the scenes to provide such a high level of service and flexibility, but the benefits aren’t lost on them.

PSD2 is enabling the concept of open banking to grow and prosper. Stay up to date on the latest advancements in PSD2; download the PSD2 guide today.

Photo of Claire Zhou
about Claire Zhou
Claire is a Senior Product Marketing Manager at DataVisor with over 5 years of marketing experience in security and fin-tech. She is passionate about empowering enterprise customers with AI-based solutions. Her expertise spans data analytics, cybersecurity, and fraud prevention. Claire has an MBA from UCLA.
Photo of Claire Zhou
about Claire Zhou
Claire is a Senior Product Marketing Manager at DataVisor with over 5 years of marketing experience in security and fin-tech. She is passionate about empowering enterprise customers with AI-based solutions. Her expertise spans data analytics, cybersecurity, and fraud prevention. Claire has an MBA from UCLA.