PSD2 and the Elevator vs Staircase Paradox

I live in a town called Villa Arriba (uphill town in Spanish), which is very close to Villa Abajo (downhill town). Although they are close, they communicate through intricate mountain roads and there is not much business between both.

Although in the recent crisis many banks merged, there are still plenty of them in Villa Arriba. However, there seems to be little competition between them, because they all offer similar products and services and with similar conditions. In order to optimize my finances, and to keep my money safe from banks going bankrupt, I have to select the best products and services from a number of different banks and distribute my money between them.

Another fact that shows that there is little competition between Villa Arriba’s banks is that they all have their branches located in a high floor, typically a 4th or 5th floor, with no elevator. I guess it’s cheaper that way. So, for all banking related tasks I had to climb the staircases of four different banks, totalling 18 climbed floors every time I wanted to update my banking information.

A few years ago, this changed for the best, a guy named Bautista, had the idea of offering a Banking Butler service. If you hire his services, he will climb all the floors for you and make your bank statements available to you in a single place, which by the way is a ground floor office in the town centre. Then he started offering additional services. Instead of giving me four different bank statements, he would on top of that give me an integrated financial position. Next, he started offering advice on how to better distribute my finances amongst different banks and products. Sometimes even from banks that were not amongst those initial four. He then started alerting me every time I got a suspicious commission or a duplicate movement, also when some of my accounts over drafted or when the balance was below the threshold that I told him. The last thing he started offering is money transfer services. I no longer had to write a check or go to the branch to transfer money, he would do it for me!

Look, the service was so good that I started telling everyone I knew about it. He soon started growing his customer base so much that others started providing similar services to his, including in Villa Abajo where they were growing as fast if not more so than in Villa Arriba.

However, not everything looked bright. He once told me how some of the larger banks tried to make his life more difficult. Whenever they recognized him climbing the stairs, they would do all sorts of things to prevent him from reaching the branch at the top. Sometimes they would say that people with sneakers were not allowed in the building (he wore them to climb faster), so he had to put on regular shoes. Sometimes they would tell him that they were cleaning the stairs and that he had to come back later (although he could see the other customers climbing past him). So, every now and then the statements from these banks were not available on time and I had to wait for a few days. He got so tired that he started wearing different disguises to climb to the branch. He got so good at it, that I no longer received the statements of those banks late. We started calling him Bautista, the man with a thousand faces!

Many years later, the town hall of Villa Arriba decided to regulate the services provided by Money Butlers like Bautista. They said that it was not enough that Money Butlers complied with Villa Arriba’s data protection laws. It sounded great to me, as it would give me added protection. Bautista would have to obtain a Money Butler license. In fact, two. One to fetch my statements and another one to transfer money on my behalf. On top, he would only be able to access the accounts for which I gave him authorization and nothing else, for which he would be inspected regularly by the Town Hall. However, the authorities also decided that banks could choose two pathways for Bautista. They could allow him through the staircase as always, or they could choose to build an elevator for him to climb faster. In both cases, Bautista had to identify himself as an authorized Money Butler by showing his license, before climbing the stairs or taking the elevator.

This sounded great to me, Bautista would be able to climb for my statements and to perform transfers quicker and this could only improve the service I receive from him. Surprisingly, things started getting worse. He told me that most of the times the elevator would not work and since he was no longer allowed to climb the staircase, he could not fetch my statements every day as before.

Bautista told me that some elevators were not reliable because it was the first time the banks were operating them. So, although they looked good, they failed because they hadn’t thought about a number of things that companies with more experience already know. For instance, in Villa Arriba power goes down quite often, and if you do not have auxiliary power the elevator won’t work when this happens.

But he also told me that some banks built faulty elevators on purpose. They were the same banks that forced him to climb the stairs in disguise. One bank had an elevator that would only allow one person at a time. Even the same person could only fetch the statements of one customer and then he had to go back again and queue to climb back up again. Others had elevators that took twice as much as climbing the stairs. There was even this one bank, that when you accessed via the elevator you only had access to this special branch where you could only fetch yesterday’s statements.

The service deteriorated so much that I stopped using it. I recently heard that Bautista and most of his competitors have gone out of business, and I am back to having to climb the staircases myself.

Recently I heard from my cousin in Villa Abajo. Their Town Hall did the same than Villa Arriba’s Town Hall, except that Money Butlers could climb the stairs when the elevators were not working properly.

Money Butlers have blossomed and the citizens are much happier. Not only that, since banks face so much competition from them, many have moved the branches to ground level and are offering those Money Butler services themselves. My cousin which is in his first year of an economics major, told me that this is because Villa Abajo understands competition but Villa Arriba doesn’t. Whatever the reason, he wins, I loose.

If you are interested in the subject, you can continue reading here:

• PSD2 and the Secure vs Insecure Staircase Debate