In 2018, a concerning 60% of consumers in Sweden abandoned their financial applications. What is even more worrying is that this number has been increasing globally over the past few years. For example in the UK, the number of applicants who abandoned applications leapt from 40% in 2016 to 56% in 2018.
When you are figuring out what the future of KYC looks like, you first have to understand its current scope and what it looks like today.
Just a few years ago, only a few people in the financial industry had access to an individual’s banking data. Data was ‘owned’ by a few major players such as large financial institutions, and all access had to go through these information gatekeepers. Limited sharing of data has resulted in a stagnated offering of banking products to customers that have not significantly changed in decades: people are paying too much for their overdrafts or money sits in current accounts earning little, or sometimes even no interest. To summarise, customers are not happy.
Since the 2008 financial crisis, the banking landscape has undergone a seismic shift to a new age of innovation and digital transformation, marked by the advent of FinTechs companies. By observing and often experiencing first-hand what banks offer – or do not offer – these new entrants have targeted what consumers perceive as the failings of banks to capture significant market shares.
6% of global consumers have shifted their primary banking relationship from traditional banks to newer companies with better technologies and simpler products. This percentage is on track for continued growth. In 2015, one in seven digitally active consumers was using FinTech. In just two years, that number has risen to one in three. The banking landscape is fast moving from an era in which a handful of big banks dominated global markets. This is a significant shift in the banking landscape: one that’s driven by radical changes in consumer preferences and underpinned in part by a generational gap.
Image Credit: Fineas Anton
PSD2 is reshaping the entire financial ecosystem all the way from traditional financial players to third-party providers (TPPs). The regulations will make it easier for technology companies, FinTechs and challenger banks to increase market share in a space that has been long dominated by banks. The resulting improved competition in the financial market, ultimately means more innovative solutions for both B2B and B2C customers.
The General Data Protection Regulation (GDPR) is now a fact of life for any company that gathers and processes the personal data of European Union citizens. It is not just EU companies and organisations that must conform; data-collecting entities around the world will have to deal with the new rules.