Digitalization in retail banking

Abstract

Traditional banks keep information about their clients just for themselves and do most of the business with their clients on a direct basis, without showing them all options on the market they have. Home banks have an information advantage over competing financial institutions but the digital transformation of the banking industry may completely change that. Introduction of PSD2 and related regulations officially opens the financial market to third parties with whom the clients may share online their transaction history from different banks providing them so with behavioral data the third parties can build their individualized offers on. Innovation boom slowly starts as currently only transactions of payment accounts are in the regulation involved but an extension into the credit business and others are already in the works. This chapter discusses possible business models, applications, business risks and new opportunities for retail banks and their customers enabled by the upcoming digital transformation.