Everyone is Banking

Retail: Zalando improves customer journey

Retail platform Zalando developed, together with payments platform Adyen, a payment method that allows their customers to make payments on their website directly via a banks transfer (account to account). The PSD2 license Zalando obtained allows them to initiate these payments. The benefit for Zalando is twofold: The customer journey is enhanced, as purchases can be made faster and it becomes accessible to everyone who owns a bank account – having a credit card is not needed. Next to that, Zalando does not have to pay fees to card payment providers anymore, which can take up a large part of the profit margin of merchants, especially in case of credit card payments. Account to account transfers are generally cheaper than credit card payments.

Transport: Lufthansa’s loyalty scheme

An example from the transportation industry comes from Lufthansa. The airline company included financial services into their loyalty program app Miles and More. The app did not only allow users to include all their bank accounts and track spending but also to conduct payments. With 30 mln app users, Lufthansa did not only see a big potential, they also feared competition from new services from BigTechs, enabled by access to Lufthansa’s clients’ payments data. Rewarding their app users for using these financial services with loyalty points aims to prevent losing them to the competition. Unfortunately, during the Covid pandemic the app has been shut down as priorities have clearly shifted for airline companies. Whether the app would have been a success is therefore an unanswered question. Time will tell if this was a starting point for other bold initiatives from Lufthansa and other transport companies.

The Future?

These are just a few examples of non-financial companies entering the open banking market and thereby becoming direct competitors for banks. We also see examples in other sectors such as the Real Estate industry (e.g. Avy, a Swedish digital rental management platform), Telecom (e.g. Iliad, a French telecom provider) and Gas & Utilities (e.g. Enel, one of the largest Italian energy companies). Possible use cases differ per sector. Most involve payments, but access to payment data enables many other services such as credit risk scoring and personalized offers. The entrance of non-traditional companies is expected to continue, either through obtaining their own PSD2 licenses or partnering with API aggregators and data enrichment providers. The EU Open Finance initiative is another possible driver for this trend. This initiative, also from the EU, comprises any data sharing and payments initiation through APIs that go beyond the payment services, payment accounts, and payment service providers defined by PSD2. Banks will therefore need to prepare for more disruptions to come.

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Author

	Alexander Eerdmans is Vice President and Head of Financial Services (FS) at Capgemini Invent Netherlands. With a background in Finance, he has a wide experience in leading projects on Open Banking, FinTechs, and Financial Services. Alexander is always working on “What’s Next” in FS and encourages global collaboration, which enables unlimited possibilities.
	Joost van Putten is a senior manager at Capgemini Invent Netherlands Financial Services. He has a background in innovation & strategy and has completed extensive work in the area of Open Banking and Payments. He has supported pan-European banks implement the Payment Services Directive 2 (PSD2) and has led multiple research studies into related market developments.
	Titia Meijburg is a senior consultant at Capgemini Invent Netherlands in the Data, Finance, Risk & Compliance team. She has a background in banking and innovation. Titia has experience in projects on Open Banking strategy, Sustainable Finance Regulations and Risk reporting.