PSD2 Use Cases

I have been involved in many conversations over the past few months which have included a number of potential ideas around how PSD2 will revolutionise the customer experience. Having thought about it a bit more, I have concluded that there are 4 primary use cases for PSD2 and that all of the ideas fit into one or more of these use cases:

1) Aggregation & Cash Management/Payments Management

Whether such aggregation and payment initiation is managed through an existing banking relationship or an external entity such as a Google etc. this can be seen as a key use case for the consumer and corporate to manage their cash in a real time manner and initiate payments between accounts as well as to third parties.

In the corporate space, this can see the demise of the SWIFT cash management services which have prevalent over the past 30+ years and a migration from the overnight/intraday MT940/MT942 messages and use of realtime balances and transaction data enabling realtime reconciliation

2) Checkout

Today we see the likes of Amazon, Paypal etc use the credit/debit card as the means to effect checkout settlement - PSD2 offers the opportunity to display realtime account balances and initiate the push payment for goods and services. For the likes of Amazon, this could lead to incentives similar to those offered to Prime customers who are willing to sacrifice the next day service and receive a ￡1 credit to the digital wallet to be used against MP3 or Kindle purchases.

There is a down side to this approach that consumers will need to be aware of which is the consumer protection that is afforded from using credit cards.

3) Comparison Websites

Today the comparision sites provide information on utilities, credit cards etc. By allowing access to realtime information, these sites could provide the automated management of savings to the best deals available with selected institutions. The next step to that could be the virtual banking with the website as they will manage the banking current account relationship. Using CASS to move the current account to the best deals in the market. A user could indicate they bank with the comparrrison website, be assigned a virtual sort code and account number which links to the physical sort code and account where the account is presently held.

4) Credit Management/Decisions

Finally, when applying for a loan or other form of credit, the ability for the consumer to allow the credit insitution/provider to be granted access to latest transaction data as a basic for making the credit decision. Moving to a more 'knowledgeable' basis of decision making will allow for better control of credit decisions which should reduce risk and could/should lead to lending at lower cost.

If I've missed anything outside of the above then please let me know, I'd be very happy to add to my list above.

What will make these use case a reality is the adoption by various actors (Banks, Google, Amazon, Comparision sites etc.) but also the Fintech community to develop the apps to drive and expand the horizons of what and how any or all of the use cases can bring added value to all parties.