The introduction of the Payment Services Directive (PSD2) on 13 January requires banks and financial institutions to make their payments infrastructure and customer data available to third parties – a change that could benefit insureres who are able to access and make use of the data.
PSD2 means that insurers will, with consent, be able to access customers’ bank accounts. They can gain insights into buying behaviour and trends that have insurance implications, helping them design products that complement individual needs and circumstances.
Insurance premium payments will be visible, giving insight into a customer’s existing policies. Insurers will be able to see how, and with whom, a person’s insurance is handled, while changes in life circumstance such as house moves and family developments will also be apparent. Such changes can affect existing policies, leading to mid-term adjustments that better reflect a current risk.
An individual’s bank records will also provide insurers with ready-made verification and financial checks, speeding up the underwriting process and providing insights on risk factors such as credit-worthiness. Meanwhile transaction data can help with the claims process by providing proof of purchase, and eliminate fraud as insurers can cross-reference the value of items.
These are just a few of the ways PSD2 can be approached by insurers to enhance data enrichment and strengthen customer profiling and relationships. To do so, they must work closely with technology providers such as RDT, who can exploit the potential of the PSD2 and build new products and services that benefit from banking insights.