- Shifting role of banks means companies could revolutionise the money transfers market
- Could soon be possible to transfer money using social media
Changes in regulation are coming, which means that Amazon and Facebook could soon access the bank account data of their customers. Is the old-school banking system going to receive a new competitor?
In January 2018, the European Commission's Second Payment Services Directive (PSD2) comes into effect. Coupled with the UK Treasury's Open Data initiative, it’s easy to see why the nine biggest banks will start offering API access to the bank accounts of their users. Third parties will be able to utilise these to make money transfers and payments in your name.
Of course, this won’t happen without your consent.
For example, Amazon will be able to offer you an additional month of Amazon Prime in exchange for your bank account details. Other companies like Facebook are expected to follow suit. The bank money transfers are expected to become much easier and more user-friendly. Soon enough, it could be possible to open up a WhatsApp chat window and type “+£10” whenever you want to transfer some cash to a friend.
If banks lose data — one of their most important resources — they could lose a significant portion of their revenue because they never see the customer making payments. This phenomenon was spotted in China where money transfer platforms such as WeChat and Alipay have become the norm.
The payment data is essential for bank’s machine-learning AI supercomputers to calculate risk. Without being able to make the necessary calculations, they’ll be unable to price accurately. In 2018, a lot of banks are planning to introduce risk-based pricing, which means we’re going to see mortgage terms specific to each individual.
The traditional role of banks seems to be shifting. If companies like Microsoft, payday lenders, and supermarkets could potentially see your bank account, the whole payment ecosystem could soon see a dramatic transformation.
