To succeed in the age of ‘Open Banking’ banks need to provide a fulfilling end-to-end customer experience that is relevant, useful and rewarding for customers. This will help build trust and help to attract and retain loyal customers.
Two major pieces of legislation have allowed for the fluid transfer of customers’ banking data. This gives ‘Open Banking’ the potential to disrupt the way that people interact with their finances and the relationship they have with financial service providers.
The benefits of open banking are far reaching. Early movers like Barclays, HSBC and Monzo are already considering how to keep customers onside when they have the ability to try-out apps from third party providers.
What does open banking mean?
Challenger banks and fintech start-ups like Monzo, Atom Bank, and Tide are in a strong position to take control of the customer relationship beyond core banking services.
If traditional banks fail to personalise their services they will struggle to hold onto customers.
Banks will need to reward customer loyalty and make services compelling and useful to ensure long-term staying power or risk losing out to lesser known providers.
Potential barriers to adoption
Education: New users will be cautious and concerned. People will need to be educated about the benefits of aggregation technology to build trust. Whoever explains the benefits and builds awareness the best will gain the competitive advantage.
Security: Trust is a big issue for banks. Third-party providers will not have to work as hard to win customers over, particularly when customers can bank with anyone with ease. Overcoming fears about the aggregation of banking data will be paramount. Designing features that make customers feel in control will help address this issue.
Stickability: New third-party providers will need to sustain interest and provide long-term user value. Ensuring that functions are immediately useful, understandable and combined with core banking functionality, including aggregated loyalty schemes and easily usable reporting and analytics, will help provide this.
What can you do?
- To compete against these disruptors banks will need to join up siloed products and services to give customers benefits from holding all of their products in one place.
- Create a better and more joined up customer experience on the whole, which adds value long-term.
- Use aggregation technology to create a more joined up customer experience which will provide new functionality that existing users will find appealing.
- Explain the benefits and build awareness for your customers.
- Design features that make customers feel in control and more secure.
- Ensure that functions are immediately useful.
Open Banking has the power to change how people interact with their finances forever. Open Banking comes into effect in January 2018.