A new type of payment offers alternatives to traditional banking

Global management consultancy Oliver Wyman says today’s latest Open Banking Standard recommendations from the Competition and Markets Authority should be seen as part of a broader pan-European move to open up banking, called the Payments Service Directive 2 (PSD2).

In their report launched earlier this year ‘Wake up to bank-to-bank payments’ Oliver Wyman highlighted:

• The work underway from the Open Banking Standard and EU regulation PSD2 will enable simplified account-to-account payments and allow information from multiple accounts to be aggregated in one place.
• Any technology-enabled consumer business, including retailers and FinTechs, will soon be able act as this new portal to bank accounts and customer information, potentially bypassing card schemes.
• Account-to-account payments linked to loyalty cards could potentially take 20% of spend away could be shifted to account-to-account channels.
• The hold of banks over consumer relationships will weaken, and further fuel the trend towards modular financial services.
• It is a huge opportunity for FinTechs, challenger banks, and consumer companies with a technology or financial angle to their business.

Looking at the impact on consumers, Oliver Wyman Partner Chris McMillan said:

“Soon, consumers will no longer have to log on to lots of different sites and apps to view their financial information or carry out transactions. If they have their savings in one bank, their current account with another, and a loan elsewhere, they will be able to view everything in one place for the first time and move money around quickly and easily.

“Companies that can offer this aggregation service will effectively own the customer wallet, will gain significant customer insights, and become an essential part of their daily lives.”

“This trend is already significantly advanced in other countries. For example, Chinese technology companies like AliPay and TenCent already have a single app that allows you to see all the information you need about your finances and the services – such as mortgage rates or insurance products – available to you.”