Three crucial things to consider as the Open Banking revolution gathers pace
By Sam Stamp, Client Lead, Financial Services, Freeformers
Technological disruption waits for no sector and nowhere is this more true and clear than in the world of retail banking. Longstanding institutions are being forced to adapt quickly under pressure from all sides. Customers, shareholders, regulators and the much-vaunted Fintechs are all forcing the big banks to look long and hard at their products, people and purpose.
One particularly motivating factor for change is the upcoming ‘Open Banking Revolution’, the result of a CMA investigation into competition in the retail banking sector.
Open Banking will enable personal customers and small businesses to share their data securely with other banks and third parties, allowing them to compare products and services and to manage their accounts without going through their bank. Further to that, from January next year, the European-wide PSD2 regulation will enable authorised third parties, given consent by the account holder, to access bank accounts and extract statement information and initiate payments, all without having to use a bank’s online services.
We recently held a breakfast roundtable to discuss Open Banking and its implications.
The lively discussion threw up a wealth of interesting thoughts, predictions, opportunities and naturally also fears on the role Open Banking will play in the future of financial services.
It’s a fascinating topic and one that will be the heart of much debate and discussion over the next few years, let alone months. Freeformers will be releasing a series of thought pieces on Open Banking and the future of financial services in the coming weeks but in the meantime we wanted to share with you our three key Open Banking takeaways to start shaping the conversation.
Who trusts who?
Trust, the true currency of the past, present and future, will remain a preoccupation for all banks, regardless of technological change. Is there a way to manifest the latent trust that exists between established banks and their customers? And how, by identifying how messages of change are delivered and, crucially, how organisations actually operate, can they be the differentiators here?
Education, Education, Education
Precedent has shown it’s not enough simply to offer explanatory information to customers; you must ensure they understand it. How will this lesson be applied to Open Banking? The changes may also shine a new light on the general lack of financial literacy in the UK, presenting a pressing need to bring everyone into the 21st century or risk serious consequences. But who takes on that role of educator?
What’s in a Partner?
As a bank, how do you open the door to partnerships and collaborations that offer added value to your customers without exposing them to undue risk? Will Open Banking become the gateway to transforming financial services into an ‘Internet Rules’ model; one that is global, open and has a free offer at the core? Or does it simply open the door for Amazon, Google and Facebook to sweep in…?
Our roundtable discussion helped remind us all of the importance of considering how banking will change over the next three years, not necessarily the next six months. Open Banking is just one part of the story, alongside AI and distributed ledger technology plus, as was a recurring theme, all of those innovations yet to even be imagined.
If you want to discuss these topics further, and learn how Freeformers can play a part in helping people and workforces within financial services develop the skills, mindsets and behaviours needed to embrace the future, please do email me on email@example.com.