People will be more banked in the future, says Metro Bank exec

PSD2 is set to accelerate a long-standing trend of customers using more and more bank products, according to Metro Bank’s chief commercial officer.

PSD2 is set to accelerate a long-standing trend of customers using more and more bank products, according to Metro Bank’s chief commercial officer.

The second Payment Services Directive (PSD2) is set to be implemented across Europe in January 2018. The much-anticipated piece of legislation will allow third-parties to access the vast swathes of account data that have hitherto been the preserve of the major banks.

Its implications will be wide-ranging, for customers, for banks and for a whole range of other merchants and service providers. According to Paul Riseborough (pictured), chief commercial officer at Metro Bank, the directive will ultimately lead to people being more banked.

“People being multi-banked is not a new phenomenon,” he said in an interview with AltFi. “But PSD2 and the API layer it utilises will mean it is a lot easier to open and operate more products and services than ever before.”

Metro Bank became the first new high street bank in the UK for over a hundred years in 2010, when it received its banking licence. It reached more than a million customer accounts in May 2017. 

Riseborough, who has written a soon-to-launch book entitled Naked Banking, believes the future could be brighter still. That future will see banks become more like aggregator platforms, on which customers will be able to manage all of their finances in one place.

“Historically people haven’t taken more products out because of the difficulty of keeping tabs on everything,” he said. “Soon, people will be able to optimise their finances more easily.”

The primary benefits of PSD2 for customers, it seems, boil down to enhanced oversight and ease of use. But Riseborough says the big question is whether services can be developed that will make bank account data available in a way that is practically useful for customers.

“I don’t think the process will be quick,” he confessed, adding that he sees 3-5 years as a realistic timeframe for transformative services to emerge.

In time, however, Riseborough sees the potential for linkages to be forged between a whole host of companies – far beyond those that are directly affected by PSD2, such as banks and other lenders. Banks could, he explained, integrate with retailers and merchants to offer loyalty rewards to customers.

There is certainly no shortage of possibility in a PSD2 world. But one of those possibilities, Riseborough warned, is that banks will become little more than “dumb piping”. He said that banks will have to work harder to establish their value proposition in the future.

Incumbent banks may find it difficult to turn PSD2 to their advantage, owing to legacy technology issues, says Riseborough. Unsurprisingly, he believes that Metro Bank’s omni-channel proposition, which pairs c. 50 branches with a strong digital offering, puts it in a position of strength.

In a world where customers can shop around exponentially more easily, he had better hope he’s right.