WORLD I: The Consumer Cosmos

Challenge Elaboration
1.

Can you please elaborate on the problem statement?

The European banking sector is anticipating a major shift in the way consumers manage their financial lives.
Whilst there are a number of factors influencing this, including the technology advancement that will enable this
shift, the tipping point is seen as a new piece of regulation called the Payment Services Directive 2 (PSD2). It is a
wide-ranging piece of regulation that is aimed at creating an effective integrated market for card-based
payments. At the heart of the regulation are 3 themes generating greater competition, enabling innovation and
improving customer security.
For the purposes of this challenge there are 2 areas of the regulation to focus on.
1. Payment Initiation Service Providers (PISPs)
When we buy something online we typically enter our payment details into the merchants website, and the
merchant then gets the money from your bank account by way of a few intermediaries
With PSD2, the Directive will allow retailers to ask consumers for permission to use their bank details. Once
you give permission, the retailer will receive the payment directly from your bank no intermediaries
The direct connection between retailers and banks will be enabled using Application Programming Interface
or APIs for short
The use of APIs is exciting because it enables innovative companies to connect to financial institutions
directly
2. Account Information Service Providers (AISPs)
For those of you that maybe multi-banked i.e. bank accounts with multiple banks you currently have to
access each bank website separately
With PSD2 customers will be able to give permission to Account Information Service Provider (aggregators),
which will allow them to view all of their multi-bank details in 1 portal (e.g. credit cards and current
accounts). Consumers will also be able to make payments directly from the portal, rather than having to go
to each bank to do this.
This is interesting stuff because now it means that new providers, not necessarily banks, can consolidate your
account information in 1 place and acquire insightful data about you, with your consent. This offers value
adding and commercial opportunities.
For the purposes of this hackathon we want to explore how people will consume financial services in the future.
Given this new regulation we want you to reimagine banking. Challenge the existing thinking. Show us how you
can disrupt financial services to delight consumers.
Some of the reading material that is available on Internet on PSDII:

Accenture Payment Services Welcoming a new phase of Everyday Payments in Europe:

https://www.accenture.com/t20150626T121130__w__/us-en/_acnmedia/Accenture/Conversion-

2.

Who is the customer or user impacted by the problem?

3.

Assets/DotCom/Documents/Global/PDF/Dualpub_16/Accenture-New-Phase-Everyday-PaymentsEurope.pdf
Accenture Payment Services Seizing the Opportunities Unlocked by the EUs Revised Payment Services
Directive https://www.accenture.com/t20160518T092811__w__/us-en/_acnmedia/PDF19/Accenture-Banking-Opportunities-EU-PSD2-v2.pdf
Starling Bank overview of PSD2 - https://www.starlingbank.com/explaining-psd2-without-tlas-tough/
5 Things You Need To Know About PSD2 http://www.sepaforcorporates.com/single-euro-paymentsarea/5-things-need-know-psd2-payment-services-directive/
PSD II Directive: http://eur-lex.europa.eu/legalcontent/EN/TXT/HTML/?uri=CELEX:32015L2366&from=EN

People who bank with one or more Europe banks or make payments in Europe
Established banks/issuers
Fintech start-ups
Retailers (especially ecommerce focus such as Amazon)
Tech companies (e.g. Apple, Google, Facebook etc.)
Schemes (e.g. MasterCard, Visa, American Express)
Price comparison websites

Can you describe that current user journey?

- At present someone who banks with multiple providers will

need to go to have a direct relationship with each bank. This
means that someone who its multi-banked cannot see all of
their financial information in one place.
- This also means that the individual will need to remember
all of the various log in details for each of the accounts
- There are aggregators available (see
www.moneydashboard.com and www.ontrees.com),
however the uptake has been very slow. In part due to the
fact that all of the liability lies with the customer and they
have to share their banking log-in details with providers of
these services.

The potential impacts of this future scenario are:

Major shift from bank/issuer holding customer data to open banking

o Opportunity to innovate and better understand and serve customers & clients
o Banks will no longer be the only ones to hold customer data this will now be available to a
wider range of organisations.

Easier for start-ups and scale-ups to compete in financial services

o Expected to be considerably less onerous to be an AISP than to get other types of banking
license
o With the right value proposition a competitor can have access to the whole market

Existing providers risk disintermediation and loss of customer relationship

o Banks/ issuers could just become the pipes, carrying the costs of maintaining all channels but
with reduced opportunity to fulfill customer needs

4.

What pain points specifically have come from the user journey?
Fragmented - People cannot see all of their financial information in one place
Complicated - Multiple passwords are required for the various banking websites
Can lack seamless integration - People have to use their banks digital banking ecosystem, instead of being
able to use a third party interface which might suit them better
More difficult to manage finances it can be more challenging for people to manage their day to day
finances than it might be if it were all in one place

5.

What impact does this have?

Consumer choice could be greater if more providers enter the aggregation market
Easier for providers to provide aggregation services than to provide full banking
Potentially fewer people use aggregation services today than would in the new environment (which doesnt
require sharing log-in details)
Customers may hold multiple products with the same provider rather than spreading their holdings across
providers.

6.

What do the Consumers look for?

There are a number of customer needs that might be better fulfilled by the new digital/mobile banking experiences.
PSD2 could enable providers to start to address some of the more complex customer needs:
Help me understand my portfolio of accounts
Help me manage my money better
Help me understand how I compare to others
Help me plan for the future

Potential solution & business benefits

1.

Can you describe what an ideal futuristic scenario would look like if the problem is solved? If you solved this
problem how would this benefit your customer?

There is no clear view of what this ideal future state looks like from a customer perspective. What we want to achieve
through this challenge is to understand what kinds of products and services this regulation will lead to and how that
will benefit the customer. We also want to understand what opportunities this then presents the provider offering the
product. There is a general acceptance that by aggregating a customers financial information in once central hub in a
secure way it will be an improvement on the digital banking service offered today. However this is only the start of the
possibilities.
Aggregation might include:
Financial services data
Non-financial services data
Switching between providers or product recommendations
Personal Financial Management
Data analytics and insights
But dont let this restrict you what else might you want to include in aggregation? What is unique about the kind of
aggregation you might offer vs. others that exist today or might develop?

2.
i.
ii.

Are there any regulatory implications associated with the problem?

Regulations require Strong Customer Authentication to be followed for accessing the account and payment
services (see below).
Strong customer authentication (SCA)
PSD2 also establishes a more robust regime of payment service user authentication, with the aim of ensuring
that banks and payments providers can be confident in the authenticity of users. PSD2 requires banks and
payments providers to apply "strong customer authentication in cases where an organisation or consumer
tries to access their payment accounts online, initiates an electronic payment transaction or "carries out any
action through a remote channel which may imply a risk of payment fraud or other abuses". This requirement
will mean a number of financial institutions will have to revise the authentication mechanisms currently used in
their online banking systems.
In PSD2 2-factor authentication is defined as a must for SCA. Therefore authentication procedures must be
based on the use of two or more of the following elements categorised as knowledge, ownership and
inherence:
1.
2.
3.

Something only the user knows, e.g. static password, code, personal identification number;
Something only the user possesses, e.g. token, smart card, mobile phone;
Something the user is, e.g. biometric characteristic, such as a fingerprint.

Glossary PSD / PSD2 Terms