Catalyst or threat? The strategic implications of PSD2 for Europe’s banks

July 25, 2016

Executive summary

The adoption of the revised Directive on Payment Services (PSD2) has set the stage for open banking in Europe. By providing standardized access to customer data and banking infrastructure, PSD2 will lower the barriers for entry to third-party providers and financial technology companies (FinTechs), and it will stimulate the development of new business models and a wide range of new banking services. In this way, PSD2 will be a catalyst for both disruption and strategic renewal in Europe’s banking markets.

Europe’s consumers have started to embrace the kinds of services and companies that PSD2 will foster. A PwC Strategy& study on PSD2, conducted in the first quarter of 2016, suggests that 88 percent of consumers use third-party providers for online payments, which indicates that there is a large, primed base of customers for other digital banking services.

Nevertheless, the overall response of Europe’s bankers to PSD2 is one of uncertainty: Although 68 percent of bankers fear that PSD2 will cause them to lose control of the client interface, many of them remain unsure how to respond to the new directive. As a result, they are adopting a defensive, wait-and-see stance that is risk averse.

In contrast, there are a few banks — and more third-party providers and FinTechs — that are embracing the possibilities of open banking and pursuing strategies aimed at winning a leading role in the future. They are not waiting until the implementation of PSD2.

In this report, we bring together the attitudes and behaviors of banking customers, the mind-set and concerns of bankers, and the responses of first-mover banks and FinTechs to analyze the implications and ramifications of PSD2 for Europe’s banks. And we offer five strategic options that banks can consider to expand their offerings, better serve their customers, and grow their market share and revenues.

With the adoption of PSD2, an irrevocable shift to open banking in Europe has become inevitable. Europe’s banks cannot afford to wait for the official PSD2 implementation date in 2018 to formulate a strategic response.

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Methodology: The PwC Strategy& PSD2 study

In the first quarter of 2016, after the adoption of PSD2, Strategy& undertook a comprehensive analysis of the new directive to answer the following questions:

  • What is the likelihood that consumers will adopt services offered by nonbank competitors?
  • How do Europe’s banks perceive the effects of PSD2?
  • How much new competition — from FinTechs and other nonbank players — will arise from PSD2?
  • How can banks benefit from the opening of data and standardized interface mandated by PSD2?

To gain the customer perspective on the above questions, a representative survey of 1,000 consumers in Germany was conducted. To capture the industry perspective, we interviewed senior representatives of 30 leading banks in eight countries (Austria, France, Germany, Italy, Netherlands, Spain, Switzerland, and the U.K.). Further, the perspectives and case studies of a representative group of European FinTechs that are already leveraging APIs and data in innovative ways were researched and compiled. The findings were analyzed and evaluated by regulatory, digital, and strategy experts at Strategy&.


Catalyst or threat? The strategic implications of PSD2 for Europe’s banks