Sector Spotlight: Open banking: power to the people?
Open banking: power to the people?
The open banking revolution is set to transform financial services in 2018. The industry is alive with activity in preparation. But, for all the internal chatter and excitement, financial institutions have their work cut-out if they are to educate retail customers and SMEs on what the changes mean for them and really steal a march on competitors.
The CMA’s move to reform the banking sector and the incoming PSD2 regulation that I discussed in February will pave the way for a new era in financial services. In 2018, FS institutions will be able to access the data of customers using Open API’s, which will dramatically open up competition for the benefit of consumers.
The changes will unleash the real potential of technology – making it even easier to switch banks, manage multiple accounts with different providers, and access more tailored products from seeing mortgages, savings and pensions all on one platform, to name a few benefits. But, if you were to ask the general public what they thought of this, few would even be aware of the changes.
The challenge will be for financial institutions to not only hire the talent that can implement the technology that will capitalise on these changes, but also the skills to better engage with customers. That communication effort is part of a much broader initiative to educate and inform.
For example, despite the pervasiveness of current contactless technology, myths abound of fraud, theft and security and take-up can be patchy among some demographics. It is clear that some financial institutions are more ahead of the curve than others. We’ve seen some major high street banks invest in this messaging to improve consumer experience, knowledge, security and trust, while others have been noticeably quiet.
This gap is growing and is being driven by the skills and experience that can be found at executive level around the boardroom table. The most successful organisations have been those that can talk to their customers, have the expertise to implement change and be agile and those that can challenge internal procedures and promote collaboration.
From the conversations I’ve had in the industry, it is encouraging to see that there is a real effort being made now to reverse that trend and bridge the gap – putting consumers back at the core of their propositions.
The clear action from those discussions is what we call the ‘open banking interim’. These are experienced executive professionals in end to end payments, professionals who understand security and authentication concerns and how to challenge the internal process that help drive the product development to better its consumer experience.
Essentially, people that understand the plumbing of a bank and how to marry that with the consumer experience. They are needed to help refocus organisations, bring back vital skills and lead transformation programmes that harness opportunity instead of making it a tick the box compliance exercise.
However, these skills are in demand and the pool of talent is relatively small and finite. As banks jostle for position, the battle for open banking interims will intensify and people will go where the technology gives them more power over their own financial lives.