The PAYTECH Book

How Open Banking and Payment Touchpoints Will Save Banks

By Anna Maj

FinTech Leader, PWC

The Big Questions Facing Banks Today

Most customer interactions with a bank end up with a payment. But payments have traditionally been a domain dominated by banks. Now, under the EU’s second Payment Services Directive (PSD2), the role of traditional banks could change, as new players attacking that segment – such as challenger banks and other FinTech and PayTech companies – see payments as a bridgehead into customer relationships. Banks risk becoming providers of commoditized products, running the “dumb pipes” behind the payments network. So, can banks make payments the primary customer touchpoints? And can payment-driven value propositions be a remedy for banks seeking to avoid becoming the commodity providers of financial services?

Making the Change

The challenge is how to prevent banks being reduced to back-end processors and make them first-choice front-end service providers. The payments services layer sits on top of the banking services layer, so the digital banking front-end naturally becomes an entry access point, the first touchpoint for consumers, a sort of “payment gateway” to the open banking ecosystem.

Under open banking, banks are obliged to grant access to bank account data through open application programming interfaces (APIs) for non-banks registered as third-party providers (TPPs). To maintain the balance in the payments ecosystem, the incumbents should not only deliver, ...