Understanding Bank Account Number Portability - PSD2

Account Number portability (ANP) is set to be a game-changing year for retail banking in EU. As the PSD2 (Revised Directive on Payment Services Directive) becomes implemented, Customer are provided with various option such as AISP, PISP, Account Portability. 

All would have heard of Mobile Number Portability (MNP) where customer have the choice of having same mobile number but with different service provider.  ANP (Account Number portability) is flexibility provided to customers to port their accounts (restricted to Personal / Business Current accounts only) across banks in EU zone. Only very few bank offer such services to attract more customer. ANP is an innovation boom for the customer to shift to any of the bank who provide better service, technology and customer service.

EU is encouraging bank to use Payment Account Directive (PAD) method to switch accounts across Banks.   The following process are followed while transferring account from one bank to another 

1. Customer historical transaction records are shared digitally from one bank to another where the account is been ported along with customer information file.
2. All the existing payment instructions, which are held with the sender bank, are Switched / Ported to the receiving bank via PAD switches.

• Any Outgoing payment related standing instruction are delinked from the  sender bank and these information are share to the new bank where the account is ported and new bank setup all the instructions in their system as is so customer never misses any outgoing payment which needs to paid as per customer request.

How does Payment system work for the newly ported account number?

Once the account numbers are ported, Banks provide unique IBAN (International Bank Account number to each   account in EU Zone. This IBAN number helps to find the contra account i.e. customer account number when any payment is processed through any payment system (SWIFT, BACS, Direct Debits, CHAPs).There will be delinking old account number with new bank account number and same IBAN number could be used for all payment services once the account is successfully transferred.

Bank should follow few common alias numbers mapping with old account number. Banks have to invest in their Core banking system, mobile banking, and internet banking system to show the Alias number across channel to the customer. This is to ensure the customer still use the same old account number along with alias number for easy reference.

Advantages of Account number Portability:

• Customer tend to enjoy same banking services without any interruption to existing payment services with more innovative solution and better service quality.

•  Banks get more opportunities to cater customer needs in area of Wealth / Asset management, Insurance,   Advisory services to new customer who are on boarded from different banks.   

• Data portability across banks will provide enormous opportunities for Fintech companies to provide innovative solutions.

• For Customer ANP will provide Reduction of cost, innovative solution, more product availability, Security (two Factor Authentication, e-tokens, biometric), Omni channel Benefits and better service will be main advantage of ANP.

•  For Bank, ANP will increase customer base for bank and proportionality increase profitability gradually.

Overall, Bank needs to update their system to enable account number portability as additional features to attract customers from competitors.   More over Banks are provided opportunity to tap deposit accounts from ANP customer if Banks provide better service quality, rates offered are better than others in the market.