I have just returned from a Easter weekend trip to Dublin and unlike in Berlin, paying by card was easily possible in most of the shops, bars or restaurants. Paying with card is definitely more convenient, however, my current main reason for using card instead of cash is adding data to my bank account. While using cash, details about my spending behaviour are lost but with card payment this data is saved and accessible later on.
At the moment the pure benefit of this is that my N26 app helps me to categorise my expenses and that I’ve a nice overview of my total expenses. However, our financial data becomes more accessible thanks to PSD2 and new services are making more and more use of this data. At the moment these services are mostly focused on recurring expenses in order to optimise contracts and help the user to save money, but it’s just a matter of time until new service providers will also offer services on our full “financial footprint”.
In order for this to happen it’s important that the holder of the financial data (e.g. bank) understands the true value of the data and treats it accordingly. Until today the value of financial data has not been exploited much and keeping “the record” was a requirement but not a business purpose. A good example for this is the monthly bulk credit card payments. I’m using a credit card issued by a travel company which helps me saving credit card fees while booking a flight. However, since the monthly sum gets deducted in one sum, the data from each single booking is gone. My N26 app cannot categorise these single payments correctly and my “financial footprint” is inaccurate. This is because no party involved had an interest to move the data but just the payment itself. There was no value in forwarding the data. Personally, I believe removing barriers all around handling and transmission of financial data will be an important post-PSD2 step so service providers can actually make use of our financial footprint and not just payment transactions.
To be continued…
This week was time again for the EXEC conference. It is probably one of the biggest FinTech conferences in Germany and personally my favourite FinTech conference in Germany. This time a little different since it was first time in Berlin and not Frankfurt, and additionally, the conference covered not only FinTech but InsurTech as well.
What was the trending topic? Well, you could say “all the typical things” as known as PSD2, Open Banking, Identity, etc. On top of that there was one more topic that was touched in a couple of presentations and conversations: Building MVPs (Minimum Viable Products) in banking. Valentin from N26 and Peter from SolarisBank touched this topic in their presentations and my very own presentation was all about “Building MVPs in banking”.
In a previous blog post I have already raised the question when we will finally see a “Spotify of Banking”: a provider of financial services that we don’t want to switch because the service knows us too well and thus creates positive entry barriers for other providers.
I know there are – especially in Germany – many people who don’t like the idea of sharing data. But if you take a look at different industries you can see that services that make use of consumers data is growing a lot, which is an indicator that more and more people are happy to trade their data in return for something.
But trade in for what? In my previous blog post I only talked vaguely about a banking service that makes better usage of financial data and provide a better service. I have taken a look into at some services that I am using that make use of my data and categorised them based on their benefits for me. Basically, there are two main benefits for me:
Are you using multi-banking already? Trust me, your bank is very likely working on it and the feature will be advertised to you very soon. PSD2 and XS2A is forcing banks to open and provide access to it’s (untouched) holy grail – its customers data. As this is a big threat for most, but rather slow moving incumbents. However, making use of PSD2 and access data from its competitors is another story. Because that’s the way banks act.
Banking is known for its homogeneous landscape and most banks have more-or-less the same offering. Multi-banking is now another way for banks to attract customers from its traditional competitors. Implementing financial accounts from its competitors into own banking front-ends is aiming in the short-term for higher customer interactions. But in in long-term? I assume the goal for most banks is to do cross-selling of other financial products. Since these players are pretty homogenous nearly all banks will follow. This is the typical me-too strategy where one player copies a new service, feature or product from a competitor in order to not be less attractive for its customers. This is very common in banking, and is especially applicable, when the initial action from one player is clearly targeting at attracting customers from its competitors. Multi-banking can be seen as something like this.
“Lars, you are seeing so many new FinTech services every day. What is really your favourite FinTech service/app/solution/…?”
I have been asked this question quite often in the last few months. FinTech is spreading and new services become available now on a more regular basis. In the old days, banks took months or years to plan, design and develop a new banking application and very often offered basically the same product in a new style. This is now changing due to new entrants in the financial service industry: services and especially apps are developed and released in much faster cycle. And these cycles will get even shorter and the attention for each and every new service will decrease on average – which is a good development.
This week bunq finally launched in Germany. The core offering of bunq is a bank account which is fully controllable through its mobile app. Sounds familiar doesn’t it? But there are a few differences to its rival N26 from Germany. bunq directly started as a full-fledged bank. This might not be that important for its customers but bunq received its banking license already back in 2015 which was the first new banking license in the Netherlands in ten years.
But coming to the app: bunq provides easy account opening and when you have already an existing bank account in Europe a picture of your ID is sufficient – no video legitimation required. Verification inside the app works with hand recognition. Yes you read correctly, not fingerprint but hand recognition. Does the average consumer care about that? Probably not, but cool anyway.
Uber has disrupted the taxi business around the world and has removed friction like no other from a complex industry. That is the reason the company is often being used as an example for the financial service industry.
Personally, I am more interested in the “Spotify of banking?” than “Uber of Banking”. Why is that you might ask? The answer is – as so often – data. Let me explain you what I mean.
If you are a long time Spotify user you might have started using the music streaming service when there was no proper alternative for your needs. But this changed during the last year: today you can choose among many different providers including Apple, Amazon and Google. There might be plenty of reasons why people don’t change but if you talk to a long term Spotify user about switching the service you will hear one reason for not doing so very often: Spotify knows me too well.
This week was pretty busy and there was a lot of material for different kinds of blog posts. The biggest news was probably the overdue RTS which was finally released by EBA. However, I am not going to write about these important technical details of PSD2. I want to write about the bigger picture and some real time examples of PSD2.
As mentioned in a previous blog post, PSD2 is just a regulatory requirement which is putting customer demands into a law. PSD2 is increasing the speed in the market while pushing banks into a direction where they have to go anyway, but this development would have happened even without PSD2.
The bigger picture of PSD2 is Open Banking and the usage of our financial data in third party services. At figo we have some amazing partners showing all of us what will be the new “normal” in our financial future.
Today is my birthday. After New Years this is probably the best day for One to take a step back and think about what we are doing with our life at the moment and what the goal is for the following years. I have a clear “five year plan” in my mind: to launch my own FinTech company.
During my Masters program in 2012/13 I had already written a business plan for a crowdfunding idea and was considering to dive deeper into this opportunity after my studies. Luckily, as I would say now, plans have changed and I joined figo instead. The last years have been quite a ride and I couldn’t be happier and prouder of what we have achieved so far (and no end in sight ?). I know the FinTech startup world is where I belong and I also know that I will be launching my own startup at one point. In my position at figo I am working on a daily basis with some very smart developers and entrepreneurs who are about to launch new companies. This is not just very inspiring but is also ensuring that I am not losing track of my own goal to launch a FinTech company.
This week I was part of a panel during the Money20/20 Europe roadshow in Frankfurt. The topic of the panel was PSD2 and all panelist had – more or less – the same opinion. And this is quite typical for PSD2 focused panels. However, traditional bankers might have ‘slightly’ different opinions, therefore, I have put the main message from our panel discussion into an open letter addressed to traditional bankers. Maybe it helps to separate the Open Banking discussion from PSD2.