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With EU debit interchange at 0.5%, what's Monzo really complaining about? Some of these European fintechs should get coached by their Indian counterparts how to negotiate more funding and rising valuation with VC / PE community. India's largest mobile wallet cum payments bank PayTM lets you top up any amount of money free of cost even via credit card @ 2-3% MDR. It still doesn't charge any fees to merchants for collecting payments. It makes whopping losses. Still it keeps raising more and more funds at increasing valuations from one round to another. At the last raise, I believe it was valued at $8B (Source).

With my similar background, I totally agree with your post. Let me add a few more tips to fintechs:

* Don't claim that your product is totally unique (even if it is). While selling to banks and FIs, it helps to put your product into preexisting cubbyholes.

* Even if you have no competitors, invent some. According to their well-established procurement processes, mainstream buyers - especially in FinServ - can't buy anything unless they get three quotations for it.

* Emphasize value over price. In my over two decades of selling to finserv, I can't think of a single bank or FI - not even public sector ones - that has bought solely because of "L1".

* Sell to aspirations. I wrote an entire blog post on this. Aspirational Selling Is Not Overselling

Those who provide true value proposition - banks and fintechs alike - will be the winners. But they don't need Open Banking for that. Innovative Fintechs Don’t Need No PSD2 Regulation.

All of these are valid, if somewhat old and operational, techniques for boosting ecommerce conversion rates. These days, ecommerce companies are taking size of target audience and conversion rates to a wholly new level by supporting deferred payment, installment payment and other brand new modes of payment e.g. Affirm, Klarna.

Not really @RobertJarvis, at least not for USA, for which I have figures readily.

If you look at chart at the end of my post How To Really Kill Cash, CIC figures for USA are:

2005: $0.75T 

2012: $1.15T

2015: $1.38T

CAGR in Last 10 years is 6.29% and CAGR in Last 3 years is 6.27% i.e. are both ~6.3%.

Ergo no difference in CIC growth over last 10 or last 3 years.

The vision / rationale of PSD2 / Open Banking is that (1) There's a lot of value in customer's banking data (2) Banks are doing nothing with that data (3) Customers are deprived of all the insights they can gain from their data (4) Ergo customer's banking data should be thrown open to third-parties to mine and generate insights that are useful to customers. 

Going by this, customers should be clamoring for PSD2 products and services and creating tremendous buzz for them, thus providing viral distribution of these offerings.

If this is not happening and if a huge public education campaign is required to just create awareness of PSD2, then the basic premise of PSD2 becomes somewhat questionable. Forget anti-climax, PSD2 offerings would be Dead on Arrival.

@JamesPiggot:

Valid question. In fact, I think the boardroom IS demanding - and going ahead - with digitalization. While I alluded solely to the CIO org. in my previous comment, on second thoughts, I think the vendor community - to which I belong - is equally well to blame for "Shadow IT". 

The case of a private sector bank in India comes to mind. A couple of years ago, the boardroom wanted to launch an instant account opening portal that would enable online opening of a bank account in a few minutes. Business asked IT to execute the project. IT consulted the incumbent CBS vendor and came back with a $M cost and 6 months delivery period. Neither the cost nor the timeline matched the boardroom's vision of getting something up and running within their perceived time window of 4-6 weeks (after which they thought competition would catch up). Did they give up after seeing IT's estimate? No. They gave a chance to a small web development company that had been knocking on their doors for months.

Long story short, the instant account opening portal was launched in 8 weeks for a cost a couple of $100K. Apart from a couple of CBS services that IT was involved in exposing to the new portal, this was a classic example of Shadow IT in action.

So much reference to funding / underfunding leads me to wonder if it's the CIOs that don't get digital. Digital simply doesn't require the kind of headcount and infra that finserv CIOs are used to controlling.

Indian Railways provides 5 minute response time to passengers' social media complaints on a 24/7/365 basis for its huge network of trains with a team size of 20 people aided by a few open-source free-of-cost sentiment analysis tools. There are many more such examples in the blog post titled Forget Frugal Marketing. It’s Time For Frugal Engineering on my company's blog (hyperlink removed to comply with Finextra Community Rules but this post should appear on top of Google Search results when searched by its title).

If CIOs continue to demand budgets for doing digital the way they demanded for doing legacy, it's not surprising that they will face massive pushback from the C-Suite. I will also not be surprised if the C-Suite is actively pursuing a "shadow IT" strategy as Forrester / Gartner terms the practice of LOBs doing digital without the knowledge / support of the CIO org.

Great post! First time I'm reading hard numbers about the Bitcoin economy. IMO, BTC has already become a new asset class, albeit one whose holders don't know whether to declare capital gains / losses made from it in their income tax returns!

Trust a challenger bank to challenge everything done by traditional banks - including connecting frictionlessly to Yolt:).

On a side note, Yolt / Starling has mastered the art of enhancing customer engagement via error messages. I spent a minute wondering what "Caught Short" could mean - which is a full 60 seconds more than what I'd have done had the app thrown out a prosaic error message like "Unable to connect. Please try later".