In Part 1 of this series, we looked at how the competitive landscape for the financial services industry is shaping out in 2019. Digital challengers are encroaching upon business services that banks traditionally had a monopoly in. However, by making the most of the tools that regulators and governments are providing them, banks can turn threats into opportunities.
We look at how banks can take their prospecting efforts to the next level, benefit from the omni-channel revolution and really leverage their local security standards to make themselves more appealing internationally. We continue that conversation here in Part 2.
On-boarding new customers is always operationally cumbersome for banks. There are KYC documents to collect and verify, Anti-Money Laundering and Counter Terror Financing checks to run and double check, supporting evidence to collect, forms to fill, documents to verify, signatures to match, contracts to sign and so on. Each of these processes, when done digitally, require trust. This is where eIDAS mechanisms come into the picture and provide the level of trust that is mandated throughout the customer on-boarding process.
It’s not just restricted to on-boarding though. A lot of these checks have to be performed at a regular frequency and costs can easily add up. Having a cumbersome process can also diminish the customer experience and drive them towards more tech savvy competitors. Providing a good customer experience is definitely a competitive advantage that many banks would be more than eager to have.
Competing with the Challengers
Banks, like all other large companies, usually lose a bit of agility as they grow bigger. This is why smaller, more nimble challenger banks and FinTech start-ups are doing so well. They are quick to adopt new technologies and bring to market new products. Another example would be peer to peer lending platforms catering to the market both on the demand and supply (of capital) side. One of the reasons for their success is how easy they make the entire process.
Banks have to compete in this battle for providing the best user experience. This means that customer’s digital identity documents should be seamlessly accepted and verified so as to provide a delightful user experience. eIDAS can provide powerful tools that can allow banks to achieve exactly this level of seamless integration across the EU single market.
A scary prospect for any industry would be the commoditization of its product or service. Commoditized services can’t charge a premium and usually compete on cost alone. In such a market, what distinguishes the competitors are things like user experience, value added services, customer service and providing a sense of security (especially for financial services).
The potential for such value-added services is truly endless and with directives like PSD2 and eIDAS, the flood gates are wide open for product as well as service innovation.
New regulations can indeed lead to anxiety or uncertainty in the short term. But when the goals of those regulations match closely with the competitive necessity of the market, they can actually be a blessing. This is indeed true for regulations like eIDAS which provide a better and safer way for European businesses and citizens to transact digitally.
References and Further Reading
- Selected articles on eIDAS (2014-today), by Gaurav Sharma, Guillaume Forget, Jan Kjaersgaard, Dawn M. Turner, and more
- Benefits of the eIDAS Toolbox – Case Studies from Various Industries (Part 1) (2018), by Gaurav Sharma
- Benefits of the eIDAS Toolbox – Case Studies from Various Industries (Part 2) (2018), by Gaurav Sharma
- Digital Trade and Trade Financing - Embracing and Shaping the Transformation (2018), by SWIFT & OPUS Advisory Services International Inc
- REGULATION (EU) No 1316/2013 establishing the Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010(12/2013), by the European Parliament and the European Council
- Selected articles on Electronic Signing and Digital Signatures (2014-today), by Ashiq JA, Gaurav Sharma, Guillaume Forget, Jan Kjaersgaard , Peter Landrock, Torben Pedersen, Dawn M. Turner, and more
- Selected articles on Authentication (2014-today), by Heather Walker, Luis Balbas, Guillaume Forget, Jan Kjaersgaard, Dawn M. Turner and more
- eIDAS webinar 1: Using electronic Identification, Authentication and trust Services for Business (2018), by the European Commission
- The European Interoperability Framework - Implementation Strategy (2017), by the European Commission
- Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (2016), by the European Commission
- REGULATION (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (2016), by the European Parliament and the European Council
Proposal for a REGULATION concerning the respect for private life and the protection of personal data in electronic communications and repealing Directive 2002/58/EC (Regulation on Privacy and Electronic Communications), (2017), by the European Parliament and the European Council
- Revised Directive 2015/2366 on Payment Services (commonly known as PSD2) (2015), by the European Parliament and the Council of the European Union
- REGULATION (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC (2014) by the European Parliament and the European Commission
DIRECTIVE 2013/37/EU amending Directive 2003/98/EC on the re-use of public sector information (2013) by the European Parliament and the Council