Banks are getting better at making use of the vast amount of customer data that they have at their disposal, according to Royal Bank of Scotland Group Plc's head of payments strategy and innovation, Damian Richardson.
"You'll see banks using more artificial intelligence to sift through data," he said, speaking at the Pay Expo Europe conference in London on Oct. 4.
This will allow banks to predict customer behavior and pre-empt their needs, for example, by offering an overdraft to a customer who tends to be overdrawn every December, or by sending them nudges to rein in their spending.
Speaking about the second European payment services directive, or PSD2, which comes into force in January 2018, Richardson said that it would be a "double-edged sword" for traditional banks.
PSD2 will allow fintech companies to plug into the infrastructure provided by traditional lenders in order to initiate payments and to build products such as personal finance management apps using customer data held by banks.
"PSD2 is both a threat and an opportunity, and it is too early to see how customers will respond," he said. "Certain revenue streams will be reduced, but it will open up new opportunities for banks too."
Banks must make sure that whatever products they build for customers in a post-PSD2 world are relevant, instantly available, trustworthy and easy to use, Richardson said.