New technology has been quietly transforming the financial services industry, bringing significant benefits to both organisations and consumers. Now, the long-awaited implementation of Open Banking is just around the corner and is set to revolutionise the sector by removing barriers around data sharing and opening up these tools to the mass market. With the availability of data combined with artificial intelligence and appropriate products, organisations can unlock a new experience for consumers and build better, trusted relationships
Limitations with the legacy banking platforms have often made it difficult for consumers to share data, even if they’d like to. Consumers not having control over their own data has stifled innovation, and reduced the ability for organisations to bring propositions to the market that truly put the individual’s financial best interests first.
Historically, consumers have had to operate in a ‘legal grey area’ when making use of third party technology to improve their financial wellbeing. With Open Banking the consumer protection is clarified and the consumer is put back in control and free to use tools that genuinely help them. Furthermore the secure data management protocols PSD2 brings, are as, if not more, robust than trusted protocols such as those used for direct debits. Most importantly, customers will need to opt-in to share their data, with consent renewed every three months, resulting in far greater awareness and control over consumers’ data and privacy. This is a positive step which will open up the sector to new tech-driven solutions that make consumer’s financial lives better.
For consumers, Open Banking will provide a more reliable experience when aggregating banking data alongside assets such as investments, pensions, savings, and any credit or debit cards. With a single picture of their financial world, digital assistance will reduce paperwork, effortlessly track their expenditure, empower smarter money decisions and openly see how to make their money work harder. This should ultimately result in a higher level of financial wellbeing in the UK.
Imagine being able to avoid a credit card charge by automatically sweeping excess money from a savings account. Going one step further digital assistants will spot when you have been treated to lunch and automatically invest the money you would have spent. A free lunch and free money – this is the future.
In terms of the impact Open Banking will have in organisations, there are far more opportunities for engagement and interaction with customers. Businesses will be able to access fine grain, transactional levels of data, meaning they can get to know the customer and unlock an entirely new approach to personalised interaction. Providing ‘Just in Time’ products and services, that add real value to the consumer, will help to grab customers’ attention and improve loyalty.
Combining these changes will have a positive and monumental impact on any organisation wishing to engage with consumers, from the financial services industry to employers and retailers. It will change the landscape of customer interaction as we know it, and will enable institutions to better serve their consumers and reap the benefits of a more trusted relationship rather than a transactional one. Businesses must now turn their immediate attention to the imminent implementation of the directive and make sure they are prepared for January and are ready to capitalise on this increased engagement.
Dan Scholey, Chief Operating Officer at Moneyhub Enterprise