User experience and design consultancy, cxpartners is predicting the next stage of the Open Banking model, marking a dramatic shift in the way consumer’s bank. The firm expects the emergence of a ‘Build Your Own’ financial services model that will allow people to curate their own financial eco-system.

The evolution from the current ‘walled garden’ model – where a bank works with chosen financial services providers to offer a limited set of products to its customers – to the new Build Your Own model is expected to happen as soon as 2018, according to the consultancy.

cxpartners believes the proliferation of innovative business models seen in other sectors has to date been slowed by structural inertia in the financial services sector, but opportunity for disruption is about to be accelerated by new legislation.

Current: Walled Garden FS eco-system model

Walled Garden FS eco-system model
Walled Garden FS eco-system model

The new model will see customers assemble their own financial eco-systems which plug into an interoperable layer; allowing them to switch products from multiple providers in and out based on their own individual needs.

Future: Build Your Own FS eco-system model

Build Your Own FS eco-system model
Build Your Own FS eco-system model

Mark Hicks, experience strategy director and lead in the financial services team at cxpartners, said: “As with all technologies, protected models like the walled garden will eventually be broken down as interoperability, driven by customer demand, inevitably emerges. There are so many examples that show interoperability always wins, as that’s where the best deal for the customer lies.”

“This will be the case in the financial services sector because when given the choice, many consumers will move from the traditional banking service model and adopt one where they can pick and choose the products and services they actually want. Even innovators like Starling are building walled gardens, albeit far prettier ones than those offered by the traditional banks. As soon as there is the appetite amongst the tech-giants and well funded challengers to develop interoperable platforms, the Build Your Own bank or financial services eco-system will start to gain traction.”

However, cxpartners also suggests that for this model to be successful, Fintechs and challenger banks need to put the customer experience at the heart of what they do.

Mark continues: “Too often, customers have felt low on the list of priorities for the big banks and their so-called ‘customer-first’ design is often based on a simplistic assumption of how people behave. People are, in contrast, irrational and need financial services models, like the Build Your Own eco-system, to work for them in a way that is easy to understand and simple, even though it is dealing with complex data.

“By using this data cleverly, there is a real opportunity to provide genuine benefit to customers and businesses, which in turn will be truly transformative for the financial services sector. The winners will be those that have worked out how to combine PSD2 with the Personal Information Economy (PIE) ushered in by GDPR. Tricky because this potent combination won’t come without security and reputational risks.”

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