Paid Service Instruction 2 (PSD2) as a business opportunity

Scandinavians are strange. I saw it when I moved to Italy and became a world citizen for some time. It is not just the fact that we live for the summer and act as self-guided photo voltaic panels when the sun peeks behind the clouds and we try to capture each ray. It is also not a fact that when someone of ours comes inside our one meter / three feet personal space, we become useless. Neither is the fact that we have more saunas than houses in this country (Finland) – and we use them almost every day.

The fact that a single mobile network operator in a country of five million people transfers more data than its European counterparts such as Vodafone Germany, TIM Italy or O2UK. This is because banks in Finland have a long tradition of conducting business with ongoing recognition to their customers. In fact, I use my bank issued ID more often to enter third party services than my online bank. These two have a common denominator – we embrace technology that frees us from social interaction, or as someone else might say; Waiting in lines and queues.

Paying Services Directive 2 may seem like a bugaboo for established financial institutions.

A lot of changes are coming with this directive, and from the perspective of identity and access management (IAM), a major requirement is strong authentication. are some of the things that seem to be changing. Using the Scandinavian example, financial institutions can turn a strong certification requirement into a business opportunity. This business model has proven to be viable and scalable in the Nordic markets.

The world’s first online forest property management service

Let me give you an example. Our client, Metsä Group (Metsäliitto Cooperative), a forest industry conglomerate with a turnover of € 5 billion, launched the world’s first online forest asset management service. Metsalito’s cooperative has 116,000 member-owners. Most of these owners now live in cities. The traditional model of owning, living and living in our own land has disappeared to some extent. Owners living in these cities sometimes have very large properties, which require trends and which can be sold. One acre of forest costs an average of € 1600 (€ 4000 for a hectare).

The online site enables member-owners to take care of their property and sell it.

Transactions can be of high value and this means strong authentication is the only option. Metsäverkko uses GlobalSign SSO to enable its member-owners to use their bank-issued credentials to securely login to the site. If the property has multiple owners through inheritance, each owner can securely login to the site from the comfort of their home couch and approve the transaction.

Since its launch last summer, Metasalito now receives 25% of its raw materials (timber) from its member-owners through an online service. Tending services occupy more than 30%.

Identity Management Business Modeling

Financial institutions around the world have a wealth of valuable information that can turn into a business opportunity – recognition. Behind our online banking credentials is a digital identity with properly weighted attributes. Banks around the world enjoy the status of highly trusted organizations and therefore the digital identities they issue should enjoy the same trust.

In my home country (Finland), banks have sold authentication services to third parties for years. It is an established business for banks and generates revenue each year. As new digital services emerge such as the Maytas Group online site, the need for reliable digital identity will grow. And, if anyone raises their eyebrows and thinks what it is about using a government-issued electronic identity, please consider it; Finland was the first country in the world to offer EIDs and as of February 2016 an e-governance portal had 0.15% (4,508 transactions) of EID users against bank ID 94.18% (2,846,933 transactions).

If you take the above example of a single e-governance portal, bank authentication generates revenue of around € 10 million (12 months x 3 000 000 transactions x € 0.30). And remember – this is an e-governance portal. What will be the revenue for a high-volume site?

Naturally, some market areas may incur a € 0.30 transaction fee.

But, it is clear that financial institutions can take advantage of identity in generating revenue. There are several ways by which you can commercialize identity services. Loyalty is another benefit of selling authentication services to third parties.

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