PSD2, the EU’s Revised Payment Services Directive, intends to open up the financial services market by giving licensed external parties the opportunity to gain access to payment and account information that was previously exclusive to banks and account-holding institutions. The directive sets out a list of updated technical requirements for all parties involved with the aim of creating a more competitive market while strengthening consumer protection. You can read more about PSD2 in our dedicated blog post.
The most interesting aspect of PSD2 for insurance companies is the opportunity to gain access to customers’ account and payments information. If managed correctly, this information can be mined for a variety of purposes and add true value to your business:
PSD2 gives insurance companies the opportunity to obtain a Third Party Provider license, which allows you to take direct control of the financial aspect of your relationship with your customer. Once your customer has given consent, you will have access to their payment information in real-time. You can then analyze this information and use it to offer personalized products and services. For example: your analytics show that your customer has just bought a new computer worth over €2000. Based on this purchase, you can instantly offer insurance for the computer. If your customer has started buying accessories for a new pet, you may want to inform him of his options for upgraded liability cover. Just imagine the possibilities if you get a little creative!
On a larger scale, transaction data will give you insight into hidden (purchasing) patterns across customer groups. This will allow you to fine-tune your general product offering to align even more closely with customer needs.
Another important benefit of PSD2 is the opportunity to improve the customer experience. Customers will receive personalized – and therefore relevant – offers and information. And instead of having to deal with their bank separately when it is time to pay, consumers can pay for your services without ever leaving your website or app.
As smart homes and technology become more widespread in the near future, you could even combine payments-based insights with your proprietary information to offer value-added services through the internet of things. Say your customer is making payments abroad, and you have reports of increased burglary activity in his home area: you could offer to help him manage the security of his home by programming the lights to an automatic sequence to deter burglars. Services like this will be relatively easy to implement but can add real value to your customer relationship.
Given the extremely sensitive nature of transaction information and payment initiation services, PSD2 also imposes a number of stringent security requirements for banks and TPPs. It focuses on two main areas:
A high-quality CIAM solution can help you implement these security requirements, gather valuable insights and provide a seamless customer experience. Among other things, this will help you implement:
Our top-notch, PSD2-ready CIAM platform Onegini Connect can set you up with the right infrastructure for your new role as a TPP. But Onegini Connect doesn’t stop there: it will also help you streamline your internal processes, connect with insurance agents and brokers, and bring customers online using a frictionless omni-channel customer experience. On top of that, it is GDPR-ready and offers a wide range of integrations with existing and up-and-coming applications, so you won’t have to abandon your current systems.
Want to take advantage of the opportunities offered by PSD2? We’re always happy to discuss your options and explore how you can benefit. Get in touch today to find out how you can benefit.