Yolt Technology Services (YTS), Europe’s leading open banking third party provider, is urging the industry to do more to promote the consumer benefits of Open Banking and the revised Payments Services Directive (PSD2), to support growth in the Fintech sector.
PSD2 was introduced back in January 2018 and the Regulatory Technical Standards (RTS) came into effect in September 2019. The EU directive has created far-reaching impact on banks, various payment service providers, online merchants and third-party providers - particularly in relation to new requirements around strong customer authentication and the introduction of open banking.
At its heart, PSD2 was implemented to foster competition and innovation within the market – aiding the introduction and growth of new tools and services for customers seeking new and innovative ways to engage with their finances. The legislation also aims to improve the transparency across the European payments market – as well as increase the security of digital payments and transactions for consumers.
Research by YTS has revealed that even after PSD2 came into full effect on 14th September 2019, businesses and banks have failed to communicate the importance of the changes and 97% of consumers are still unaware of the purpose of the legislation. The vast majority (90%) of consumers agree that online banking services and other money management apps have made it easier to manage their finances. Despite this, industry players have largely failed to communicate to their customers how new legislation has opened the door to a new world of financial tools.
Previous attempts to reach out, engage and educate consumers have had limited success. Just 55% of consumers can recall having been contacted by their bank about the recent PSD2 changes and, of those, just 28% understood why they were contacted. Through customer emails and in-app notifications, banks have gone some way to boost consumer awareness, but it’s clear that the industry must go further to ensure consumers understand PSD2.
Research from Yolt Technology Services found that 65% of UK consumers hold accounts with more than one bank/building society, demonstrating that there exists a clear majority who could benefit from account aggregation and other innovative services enabled by Open Banking.
Leon Muis, Chief Business Officer at Yolt Technology Services, commented:
“Continued innovation in the financial services landscape relies, to some extent on consumer awareness. It’s concerning that so many people are unaware of the opportunities provided by Open Banking and PSD2 – despite these directives being implemented to improve the financial products and services available for consumers in the first place. “Open Banking and API connections have given rise to a new world of financial tools, but all of us in the industry have a role to play in promoting the benefits of these new initiatives - educating both business and consumers on how these legislations will impact them now and in the future. A rising tide of engagement and awareness would ultimately benefit both consumers and the industry.”