eNewsletter Autumn 2018
The banking industry is looking to achieve strong customer authentication and consent as required by PSD2, GDPR, and Open Banking. This is supported in the report by PwC and the Open Data Institute examining the first six months of open banking in the UK, where researchers found that by 2022 the country market could be generating £7.2 bn in value.
As Open Banking allows customers to share access to their financial data with non-bank third parties, there are concerns about the sacrifice of control by incumbent banks. How this is viewed by banks will determine its success. Do banks see the Open Banking platform as a transformational opportunity to expand their reach to new customers by creating new service propositions combining predictive analytics, artificial intelligence, and financing or is it perceived simply as a compliance burden for them?
According to EY’s UK FinTech Open Banking Snapshot report, customer adoption is seen as the biggest challenge, therefore highlighting customer education as a top priority to make open banking a success. Perceptions around user experience and data security will drive the urgency to build processes that ensure security and reliability without sacrificing speed and simplicity.
The ideal approach for banks is to capitalise on their advantages and identify which customer expectations to invest in and in turn to deliver a more personalised approach, enhancing customer loyalty. Banks are likely to pursue a model blending the ability to provide the infrastructure and offer banking products and services to customers both via third-party interfaces as well as their own.
According to Deloitte’ s research on Open Banking: How to flourish in an uncertain future that examines how to thrive in an open banking future, banks are suggested to:
- Invest in capabilities to enable data collection, analysis, and decision-making based on data insights. The ability to exploit and use customer data in innovative and more individually tailored propositions will be paramount.
- Reshape their organisational structures and cultures from the top down. Innovation will need to be placed at the very heart of the business, and be encouraged at all levels of the organisation.
- Adapt to the agile way of working within FinTech and technology firms.
Although the future of Open Banking is looking promising, it is certain that its success highly depends on the trust and acceptance of the end-customer. Those interested in getting ahead should focus on providing tangible customer value with more options, greater personalisation, transparency and simplicity.
Profile’s extensive experience in Banking system implementations can successfully support such initiatives. FMS.next Suite, the company’s cloud-enabled, PSD2-ready, Digital Banking solution, delivers advanced capabilities to international Digital banks and Fintech firms that result in exceptional user experience and business agility for both professionals and their customers.