Ten Things You Need To Know About Open Banking
Open banking launched in the UK earlier this month and is set to shake up the financial services industry as we know it. But how will it really affect customers and service providers?
Here’s the ten things you need to know about open banking…
- Greater Choice, Greater Competition
Open banking means greater choice for customers and more competition for banking service providers – creating a more level playing field between traditional banks and FinTech start-ups.
- Innovation in the Financial Services Market Will Increase
Open banking requires banks and building societies to make certain information available to other approved companies through APIs, enabling third-parties to create digital services that provide up-to-date information about banking products and services.
- More Control for Customers
Customers are in control of their data; it will no longer be locked down with their bank, and they will have the freedom to share it with a variety of financial service providers as they wish – from bank account aggregators, to budget calculators and bank account comparison services.
- The Way We Make Payments Will Evolve
There are changes for retailers too, such as the opportunity to implement a new kind of digital payment, direct from a customer’s bank account. Retailers will need to explore how these new types of payment fit into their customer journey and test it with users (rather than shoehorning it in), if it is to be effective.
- Evidence-Based Differentiation
As a flood of new financial service providers hit the market, well-designed user experiences based on real insight from customer research will be a key differentiator. Providers who don’t differentiate could be at risk.
- Security and Trust Will Be Vital
Security and trust will be essential to the success of open banking. Of course, any data will only be accessible by third-parties with the customer’s explicit consent – but designing quality services that demonstrate trustworthiness to customers will be vital (and is another opportunity for differentiation).
- Rising Customer Expectations
Customer expectations will only continue to increase as a result of open banking; not least because it will be much easier to jump between services if they are not satisfied. It will no longer be enough for banking services to be best in class.
- More Need for Collaboration
Silos within financial service providers need to become unified and work collaboratively to design the joined-up service that customers will expect – from service discovery to user on-boarding, through to individual transactions. Everything will need to be seamless.
- Don’t Ignore Big Data
With more services having access to more customer data than ever before, the opportunities for learning and personalisation are huge; big data isn’t going away, so don’t ignore it!
- A New Breed of Bank-Customer Relationship
As a result of open banking, the customer – bank relationship will look very different in the near future. Now more than ever before, there will be a move from a transactional, product-based approach to a customer-centric approach.
Open banking is happening, and if you haven’t already started to explore what it means for your organisation and your customers – now is the time.
We’re experts at designing and testing user experiences and helping teams work together to design services in a joined-up way. We’d love to help you tackle the challenges and opportunities around open banking – so please get in touch.