Open Banking and the revised Payment Services Directive (PSD2) are changing financial services forever - and shaping the future of Fintech along with it. If you want to confidently take your place in this new world, but you’re not quite sure how your business could benefit, read on for five real-life examples of the benefits they can bring to leading financial institutions and ambitious tech businesses alike.
1. Low up-front investment
Open Banking and PSD2 allow banks a lot of freedom in how they structure their APIs, and so making the connections requires a lot of experience.
Open banking and PSD2 are opening up opportunities for banks and financial institutions to benefit from Account Information Services (AIS) and Payment Initiation Services (PIS). These services delivered by a Technical Service Provider (TSP), such as YTS, equip you with a ready-made API, meaning you can start providing value for your customers right away.In addition, you’ll save your own developers a lot of time, which they can spend on building and expanding your business.
With YTS, you pay for the number of API users you have, plus a licence fee. That means you can start at a lower tier and expand your capacity as the open banking side of your business grows. Better for your budget and your peace of mind.
2. Reduce business risk
Previous transaction behaviour is one of the best predictors for creditworthiness. Whether you work for a bank extending mortgages, a credit provider extending consumer or business loans, or a merchant offering payment in instalments, the risk of customers defaulting on their payments is an ongoing worry.
Open Banking and PSD2 can make your life easier. YTS Account Information Services gives you a much clearer insight into the actual financial status of prospective customers – their bank balances, income, actual expenses and spending habits, and recurring payments. Having this fuller picture enables you to quickly and accurately determine creditworthiness.
3. Save on expensive payment methods
Offering credit card payments has long been the standard for online merchants, because it’s an easy and safe way for consumers to complete their purchases. However, the drawbacks are significant: processing a credit card payment generally costs you a percentage of the purchase price. In addition, the presence of a settlement window between banks means that you will usually only get your money the next day at the earliest.
Through YTS Payment Initiation Services (PIS), you offer your customers the ability to pay you directly from their bank accounts, while only having to confirm the payment with their bank. And because the transfer is initiated instantly, you can avoid the settlement window. It’s easy, secure, more cost-effective per transaction, and all made possible by PSD2 and Open Banking.
Other advantages of AIS include:
1. Machine-readable data instead of badly photocopied bank statements
2. Instant access to information
3. Verified accurate information that reduces fraud risk
4. Lower business cost thanks to less manual processing
4. No maintenance, no worries
Banks are continuously updating and improving their Open APIs; that's positive for the industry, but can create a hassle internally if you're required to constantly update and maintain your connections. The YTS connection team is constantly monitoring these connections and will update and maintain the API as quickly and seamlessly as possible.
With YTS, you are guaranteed to benefit from our continuous maintenance work, saving you time and worry.
5. Scale as you go
Deciding which size to build for, and how and when to scale, are critical steps in software development. On the one hand, you don’t want to invest a lot of time up front to build a service that may not pay off. On the other hand, what if it does? At YTS, we've designed our services to help you scale quickly and seamlessly, as and when you need. Even if you start at a low volume or just as an experiment, we promise that you will be able to scale up your services without running into performance problems - all with our API. Expect a high volume from the start? We have you covered there as well. From our free Sandbox to Enterprise solutions, our pricing fits businesses and goals of all sizes.
Would you like to get to know us even better? Fill out the below contact form and we’ll get back to you soon. This might be the beginning of an amazing partnership.