PSD2, or the Second Payment Services Directive was introduced in Europe in 2018. It kickstarted several thrilling innovations around consumers’ interaction with multiple, or many, banking services.
Financial services are fast evolving. The latest industry entrants, customer behaviour shift, and ever-changing digital solutions created another landscape and financial institutions contended with it.
Financial information is sensitive – meaning, traditional banking requires siloed security for customers to access in-store branches and mobile banking applications. As a result, PSD2 opened doors to an entirely new era called multibanking.
Multibanking harnesses some of the benefits of secured flow of data through AIS (Account Information System), seamless transactions through PIS (Payment Initiation Services), and improved analytics through Account Insights. It creates a single user interface connecting multiple banking accounts through one interface.
How Does Multibanking Help Financial Services?
As the transition from paper bank statements to online statements represents banking digitisation, consolidation, and control of multiple accounts via one interface fundamentally changes customer relationship with service providers in the financial sector.
Some Third-Party Providers, or TPPs, developed a cutting-edge app for personal finance management serving as the central point connecting multiple accounts. Finally, multibanking aims to become the only go-to destination offering customers the best way of fund management and interact with bank accounts.
As small businesses and individuals harness the benefits of multibanking and selected financial products that meet their banking needs, traditional financial services have to rethink ways of building customer loyalty.
Advantages of Multibanking
When direct engagement and communication between financial services and end-customers is reduced, it empowers the latter with an improved financial overview to unlock innumerable benefits to improve customer service.
- Active Search Across Linked Bank Accounts: If end-customers use multiple accounts across different banking providers, it is extremely tedious to retrieve information related to specific transactions, identify duplicate payments, or conduct a transaction audit. AIS through an open banking system allows third-party multibanking service providers to recover account information and develop a search-friendly database. Dynamic search also improves financial audibility and visibility to assist customers to filter through data pages and discover exactly what they are looking for.
- Centralised Data Management with Enhanced Security: When users access multiple accounts via a single interface, it negates the need for different logins. As a result, it simplified the process of authentication and provides a single gateway to multiple banking accounts. PSD2 legislation centers around customer data security and privacy help TPPs embrace the concept of Open Banking responsibly and reliably.
- Real-time Liquidity Insights: For small businesses, it is crucial to keep a track of liquidity developing in the company daily to ensure resources are managed properly and for timely investment decisions. Whereas traditional methods to reconcile accounts involve error-prone and time-consuming processes, open banking offers a universal approach to cross-check over thousands of data automatically across a wide range of accounts.
- Seamless Account Transfers – Peer to Peer: PIS (Payment Initiation Services) facilitates seamless peer-to-peer transfer across accounts safely and securely. For third parties, collaborating with Open Banking as a part of the established ecosystem of banking having international reach can reduce barriers when dealing with other new customers only to boost conversions.
It is tough competition in the banking sector. However, if you aim to boost your conversions and meet your business goals, try Monite Multibanking services and experience unparalleled services.