By Kevin McCallum, CCO at FreeAgent
Despite being heralded as a game changer ahead of its roll-out in May last year, at first glance, Open Banking appears so far to have somewhat under-delivered on its promise of radical improvements. When the Competition and Markets Authority ordered its implementation almost three years ago, everyone enthusiastically welcomed the prospect of innovative challenger banks and other fintech companies using technology to disrupt the traditional retail banking sector. However, over a year on from the implementation date, the incumbents are still leading the field, leaving the industry upstarts in the dust.
By tearing down the barriers to the walled garden of the banking sector and requiring banks to give rivals and third-party services access to customers’ account data – subject to their consent – Open Banking was designed to spur competition through innovation. Many predicted that the traditional banks would become the pipes, acting as mere infrastructure providers which served nimble, third-party fintechs who would connect customers with an array of financial services in a user-friendly app.
This isn’t quite how things have turned out.
Instead, it has been the elder statesmen of the banking sector that have embraced Open Banking. HSBC was amongst the first to offer account aggregation (the ability to view information from all of a customer’s accounts in one place), and it didn’t take long before Barclays, Lloyds and RBS/NatWest followed suit.
Looking back, the way things have turned out shouldn’t really come as a surprise. After all, there are great incentives for big banks to get on board with Open Banking. Access to rival banks’ customer data, which can be used to aid product marketing and lending decisions, was always going to be an attractive prospect.
Since Open Banking’s implementation, a number of digital only banks like Monzo, Starling, Tide and Revolut have entered the mainstream in the UK, and while these banks all offer features like savings round-ups, spending analysis, budgeting and merchant recognition, these innovations have happened within the context of a traditional bank account.
We are now starting to see the first signs of innovation amongst third party services which plug into bank accounts. For example, Moneybox lets its users round up their spending into a savings account and CastLight allows lenders to understand customers’ affordability more quickly. We have even seen Lloyds TSB offering their own tool, in the form of their loan comparison service, powered by Funding Options, which offers products from a variety of providers.
Even so, these innovations are hardly leaps and bounds ahead of products that were already on the market long before Open Banking became a thing. The main difference is that these new products are using more sophisticated – and secure – methods of data collection. At FreeAgent, where we have offered bank account integration through more rudimentary means for several years now, we are witnessing strong customer demand for efficient, API-driven bank account access. Most onlookers, and indeed digital-savvy customers, had expected more expected to see more progress by now.
Slow and steady
Unlike the UK’s nine largest banks, which were mandated by the CMA to make account data available by January 2018, the digital upstarts have been free to sit back and observe how things play out – their deadline for the implementation of Open Banking isn’t until September 2019. Also, importantly, unlike the big banks banks, they don’t need to transform their legacy systems for a digital age. For these digital banks, their future is in growth rather than reinvention.
Another potential cause of digital banks’ reticence to embrace Open Banking is that they often have less capital to hand than their more established competitors. This means that they have to plan out their investments more carefully than wealthier institutions, rather than dive headlong into costly initiatives. In fact, Monzo has publicly stated that it will explore the possibilities slowly, exploring whether to build features like account aggregation “in 2019”. For banks – even a cutting-edge, agile one – “move fast and break things” is a tough mantra to follow.
The challenges involved in adopting Open Banking are also likely to be behind the delay. Adoption is a complex process – even more so for account providers than for third-party accessing services, who merely have to handle the coding for integration.
Come September, the playing field will level. As PSD2 becomes compulsory for all players, regardless of size, innovation will become more evenly distributed. But things won’t stop there.
While it may feel like Open Banking has dominated conversation in the sector over the last couple of years, partially due to the unexpectedly slow roll-out, we shouldn’t lose sight of the fact that it probably won’t be long before the cycle of adoption and innovation surrounding it dramatically accelerates, driving increasing numbers of services and competition.
Technology becomes successful when innovation becomes normalised. The ultimate test of Open Banking’s success will not be who is first to market – it will be when we no longer talk about it at all.
Study of 50,000+ UK banking app reviews reveals customer ‘frictions’ among prominent retail banks
o Login and user authentication: Nearly a third (30%) of digital banking app customers had issues with logging into the app through their devices, and 1 in 5 (20%) cited problems with username and password or passcode authentication
o Customer service:
§ Nearly a quarter (24%) of customers felt like they were waiting too long for customer support
§ Over 1 in 5 (22%) were unhappy with the customer resolution
§ Over 1 in 10 (16%) customers cited that the support over chat was unavailable or not useful
o Notifications: Almost a quarter (24%) cited that the wrong operation – or none at all – was performed when they clicked on the notification icon. 23% didn’t receive notifications for payments while 1 in 5 (20%) received too many notifications
Today Mobiquity, a full-service digital transformation enabler, launches a ‘Friction Report to benchmark UK & NL mobile banking apps,’ identifying ‘frictions’ within the UK digital banking app customer experience.
The study of 50,000+ UK customer banking app reviews within the Google Play Store and the App store shows the main ‘frictions’ across prominent UK retail banks.
One of the key issues was with login and password authentication. Nearly a third (30%) of digital banking app customers had issues logging into the app through their devices and 1 in 5 (20%) cited problems with username and password or password authentication.
Another ‘friction’ was customer service; nearly a quarter (24%) of users felt like they were waiting too long for customer support.
Almost a quarter (24%) cited problems with notifications. Either the wrong operation was performed, or no operation was performed at all when they clicked on the notification icon. 23% didn’t receive notifications for payments while 1 in 5 (20%) received too many notifications.
Meanwhile, over 1 in 5 (22%) were unhappy with the customer resolution, and over 1 in 10 (16%) customers cited that the support over chat was unavailable or not useful.
Commenting on the report, Matthew Williamson, Vice President of Global Financial Services, Mobiquity said: “As the use of digital payments increases during the pandemic, so has mobile banking usage. The launch of Mobiquity’s Banking Friction Report helps banks to identify the ‘business frictions’ in their mobile banking experience to help align with evolving customer expectations.”
“An interesting observation that can be made is that most of the banking apps in the Google Play and App store score highly, but when you only account for reviews where people actually leave comments regarding an app feature, i.e. feature ratings, scores are quite low. This can be attributed to users no longer having to proactively go to the Google Play or App store to rate an app, but now are prompted to review an app while they are using it.”
“Nowadays, banks cannot risk treating their customers as passive observers, building products and features that do not take their feedback into consideration. Looping customer feedback into the decision-making process is key as banks get real-time information regarding which aspect of the app customers value the most, and where they find the most friction while interacting with the app.”
The future of offshore banking
By Granville Turner, Director at Turner Little.
Despite its misconceptions, the popularity of offshore banking is growing. Not only is it a perfectly legal way of holding your money, but with the right professional advice, it is also reassuringly simple to open an account.
This ease-of-use is prompting many offshore banks to change their offering to compete and make overseas banking even more accessible. No longer is it limited to just the super-rich.
So, what does the future look like for offshore banks? We’ve compiled a list of the top fundamental changes happening in the realm of offshore banking.
Catering to niche markets is the future
Rather than managing account holder’s money in general, offshore banks are tapping into how they can best serve different demographics. Essentially, it is about taking a more bespoke approach to managing money at various stages of life.
But catering to a variety of markets doesn’t just stop there. Many overseas banks are now accepting crypto as a form of currency to appeal to digital, tech-savvy generations.
Cryptocurrency is also attractive for those who see the security benefits it can offer.
Paper chains are fast becoming a thing of the past
As banks move away from paper in favour of digital, security is on everyone’s minds. This is because information is an important asset to many businesses, so protecting it is vital. As such, banks are securing data with the most vigorous encryption security standards.
For account holders, this means digital bank transfers and communication become less of a risk and the smarter thing to do. Paper chains are fast becoming a thing of the past.
Instant access, day or night
In today’s digital world, you don’t need to travel overseas to open an offshore bank account; everything can be done online or over the phone. And like most UK standard current accounts, many offshore accounts now offer online and mobile banking features. So account holders can manage their offshore finances and investments while transferring funds with ease.
Offshore banks are following the same route of challenging onshore banks by going branchless. This offers substantial benefits for account holders, as branchless offshore banks don’t pass on as much overhead costs to the customer. Ultimately, this means customers can earn better interest rates and other returns on their investments.
Happy to help
At Turner Little, we work closely with offshore banks to provide you with quality service tailored to your needs. With over 20 years of international banking experience and specialist expert knowledge, we will assist you with your enquiries, no matter how complex. And every account we arrange comes with internet banking, card facilities and the ability to transact internationally.
Hong Kong’s First Multi-Cloud Challenger Bank Goes Live with Temenos
- WeLab Bank designed, built and launched using cloud-native Temenos Transact in less than 10 months
- WeLab offers next generational digital services for the 7.5m people in Hong Kong to access from their mobile phones
- Customers can open accounts remotely in just 5 minutes with bank reporting 10,000 account openings within 10 days of launch
Temenos (SIX: TEMN), the banking software company, today announced that WeLab Bank, Hong Kong’s first homegrown virtual bank, has publicly launched using cloud-native Temenos Transact to provide a range of next generation digital services for customers to enjoy 24/7 from their mobile phones. Designed, built and launched in less than 10 months, the fully digital bank has seen rapid take up with a reported 10,000 account openings within the first 10 days of launch.
WeLab Bank is powered by cloud agnostic Temenos Transact for core banking along with Temenos Analytics and Financial Crime Mitigation. Implemented on Amazon Web Services and Google Cloud, WeLab is the first multi cloud digital bank in Hong Kong. Operating on multiple clouds at the same time gives WeLab increased operational resilience and disaster recovery capability and is a regulatory requirement of the Hong Kong Monetary Authority for new digital banks. According to the Economist Intelligence Unit 2020 report for Temenos, 81% of global banking executives surveyed believe a multi-cloud strategy will become a regulatory prerequisite.
Developing a cost-effective and scalable core banking solution was paramount for WeLab. Temenos cloud native software is built for the digital age using API-first and DevOps principles and engineered to deploy in containers and microservices. This makes it easy for WeLab to scale for future business growth efficiently and eliminates the need to provision for peak processing volumes so that the bank only pays for its actual usage, yielding significant cost savings.
Critically, with NuoDB the solution delivers a cloud-agnostic, distributed relational database that enables WeLab to deploy an active-active on-demand database across multiple cloud providers with near zero downtime failover.
Temenos Transact is a preconfigured system and so requires very little coding and with Temenos model bank to address local practices and regulations, WeLab was able to bring its service to market faster and extend its innovation with more than 400 out-of-the-box APIs.
With Temenos, WeLab bank is set to transform banking in Hong Kong. In as fast as 5 minutes, customers can remotely open a WeLab Bank account with $0 monthly fees and start enjoying differentiated services such as time deposits with competitive rates, an interest-bearing deposit account with an instant virtual Debit Card, and real-time payments powered by Faster Payment System (FPS). Everything can be done on a mobile phone, simply and effortlessly.
Adrian Tse, CEO at WeLab Bank, commented: “WeLab Bank was born from an initiative to reimagine the banking experience for the 7.5 million people of Hong Kong. From the start, we knew this vision needed the most advanced cloud native technology and a partner that shared our vision for digital transformation. With Temenos we have efficiently built WeLab Bank from scratch, free from any legacies, with innovative features that proactively help customers to take control of their money and their financial journey.”
Max Chuard, Chief Executive Officer, Temenos, said: “Congratulations to WeLab Bank on the launch of their trailblazing new digital bank. Building and launching a licensed bank in such a rapid timeframe is a fantastic achievement and we are proud to have supported them in becoming the first multi-cloud digital bank in Hong Kong. Temenos cloud-native, cloud-agnostic strategy means we can satisfy the needs of the most innovative and ambitious neobanks like WeLab Bank to run on multiple cloud providers. We know this is just the beginning for WeLab and we are excited to be part of their story as they revolutionize banking for people in Hong Kong.”
Bob Walmsley, CEO of NuoDB said: “We are excited to be partnering with Temenos to help WeLab Bank achieve their aggressive launch timelines and deliver innovative banking services to its customers. We were inspired by the technical vision of WeLab and knew that executing an on-demand, multi-cloud strategy was a perfect fit for NuoDB. Our enterprise-class, distributed SQL database combined with Temenos’ cloud-native technology helps banks of all sizes around the globe migrate to the cloud to improve agility and reduce costs.”
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