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Is one single payment standard the way forward for the banking sector?

The financial sector is bursting with disruptive Fintech start-ups at present who are shaking up the banking and insurance sector with innovations varying from online mortgage banks to online payment services. With innovation occurring at such a rapid pace, how are banks responding?

To some extent, the arrival of the revised Payment Services Directive (PSD2) is having a big influence on how banks react. PSD2 not only regulates new forms of payment institutions and models, but also requires banks to grant access to customer data to third-party providers (TPPs). While PSD2 is accelerating digital disruption and competition to the traditional banking model, it also provides the banking sector with new opportunities to leverage their customer base, knowledge and experience of working in a highly regulated environment.

But taking advantage of the opportunities is unlikely to be straightforward. A particular difficulty the sector is facing is the lack of one European payment standard. Dutch bank, ABN AMRO, announced in January 2018 that it will no longer participate in developing the Payconic app alongside other Dutch banks, and will focus its activities solely on the further development of Tikkie.

Tikkie is a free-to-use app for iPhone and Android which is legally owned by ABN AMRO Bank, and marketed as its own brand. The app offers clients of all Dutch and, as of January 2018, German banks mobile payments services free of charge. Tikkie has already proved highly successful in the Netherlands, with over 2 million people now using the app and is proving particularly popular with millennials as you can easily send payment requests to friends using WhatsApp or text messages, inviting the sender to pay through IDEAL (in the Netherlands) and their own familiar banking environment.

A more recent development is that Tikkie is looking to not only facilitate payments between friends and family but also in a business setting. The company is for example exploring the opportunities to facilitate payments in shops, restaurants, bars, festivals and even possibilities for fundraising activities of charities like the Dutch Heart Foundation and War child.

Anyone with a smartphone and a Dutch or German bank account can use Tikkie. The recipient doesn’t need to have the Tikkie app installed. It is the ease of use and also knowing for sure that you receive your money back which has made the app so popular in the Netherlands. Since Tikkie is now also expanding in Germany, it is realistic to expect that it also will expand in the future to the rest of Europe.

Apps like Tikkie are already changing the way we perform payments and it’s a trend that will only continue in the coming years. While the banking sector continues to react and evolve alongside such disruption, recent developments emphasize the importance of a single standard to not only speed up innovation in payment services, but help to avoid a highly fragmented banking environment.

Please feel free to leave a comment in the comment section and give your opinion on the challenges and opportunities which are currently popping up in the financial services sector.

Carel Van Oldenbeek

Partner - Financial Services

Carel is a Financial Services Partner at Mazars in the Netherlands. In this role, he supports corporate and international clients with audit and consulting solutions in the areas of complex financial instruments, ISAE 3402 certification, laws and regulations and IFRS issues. Carel is a Chartered Accountant and holds a Masters of Science in Audit & Accounting from Nyenrode University.
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