Retailers see Open Banking as an opportunity for better customer experience

As PSD2 comes into effect in the European Union in January 2018, retailers are optimistic and believe that the new regulation will allow them to offer better customer experience across the board.

The new payments directive will require banks to grant third-party providers – such as retail merchants – access to a consumer’s online account/payment services in a regulated and secure way, with the consumer’s consent.
As part of the study, Accenture surveyed nearly 80 payments executives at large retail companies and banks across Europe to determine how they will respond to the new regulations.

The research found that nearly one-third of the retail companies surveyed will be able to plug in directly to banks to obtain consumer information and initiate payments by the January 2018 PSD2 deadline requiring banks to provide access to third-party providers, and nearly 90% of the retailers will be able to do so by 2019.

The opening up of banks’ networks to non-bank third parties, known as ‘Open Banking,’ will let consumers transfer funds, compare products and manage their accounts outside of the banking environment. It essentially allows for the acceptance of payments directly from a consumer’s financial institution without the need for an intermediary.

Open Banking will let retailers and banks work together directly, without the need for intermediaries such as gateways and merchant acquirers. One way in which retailers will access customer data from banks in a secure and controlled setting is through application programming interfaces (APIs). While APIs would enable retailers to reduce or eliminate card transaction fees, they would also let banks offer additional services, such as point-of-sale loans or identity verification, directly through third parties.

Among the ways in which the retailers surveyed said they plan to use APIs are to:

• access customers’ financial information so they can tailor products (74% of retailers surveyed);

• initiate payments directly with banks to negotiate better transaction fees (53%);

• reduce fraud (53%);

• generate relevant point-of-sale offers and discounts based on consumer spending habits (51%).

Retailers also expect Open Banking to drive significant in-store innovation. The APIs that retailers cited most often as ones they plan to imbed into their existing point-of-sale channels – enabling consumers to access information directly from the retailer – are bank-account-balance display (cited by 67% of respondents), payment initiation (63%) and bank-account transaction history (60%).