The Open Banking Revolution Has Begun and Looks Set to Thrive

By Joydeep Bhattacharya, Managing Director at Fjord, Design and Innovation from Accenture Interactive

The financial industry could be on the cusp of monumental change. Just last month the Competition and Markets Authority (CMA) announced that it will be asking banks to enforce better policies and processes when it comes to consumer banking, providing access to finances and information through a single mobile app by 2018. This in turn, claims the CMA, will allow customers to reach better, more informed decisions regarding their money, and facilitate easier transitions to alternative services.

Joydeep Bhattacharya

A supporter of the CMA’s proposals, I do however have reservations concerning its presentation of ‘the mobile banking revolution’. These proposals go far beyond the mobile side of banking – so perhaps the more appropriate term to use is the ‘open banking revolution.’ In the eyes of the consumer, banks that offer a mobile service are simply meeting basic requirements. Thanks to their fluid experiences in non-financial industries, mobile banking is just the starting point. Customers now want and deserve more.

Becoming customer-centric in the digital age

The key thing to remember is that we as individuals interact with brands and businesses in various modes. At the base level we have rational or instant modes – for example, where we want to check an email or text on the fly. In some instances, this mode becomes exploratory; we want to carry out a series of actions in quick succession, to conjure up a bigger picture or to gain a better understanding of something. Reflection is also a key mode, where we take the chance to reflect on previous decisions and learn from them.

The banking industry therefore needs to shift away from those everyday transactional journeys and instead aim to design an exploratory and open-ended pathway. Customers don’t want to have to log into a mobile app in order to monitor their finances. They instead desire a service based on value exchange, which helps the customer achieve their goals. Whether this is a bank delivering extra assistance to finance a new car, or offering a more competitive rate on a loan to help book a holiday, it’s important to widen the customer experience beyond the basics.

The future of open-source banking

One of the CMA’s proposals is an open-standard Application Programming Interface (API), which banks and financial institutions will be able to incorporate within their existing applications and services. This standard will allow authorised parties to access information on banking services, prices and service quality. It will also facilitate the sharing of banking information between customers –with their consent.

A great example of an API already in use is with Google Maps. By overlaying your calendar data with maps and traffic information, the app can alert you to traffic snags and provide an alternative route. Applying this principle to the banking sector, perhaps the credit cards of the future will notify you by text message if you’re about to dip into your overdraft, and will let you top up or increase the limit on the spot. Not only would this help the customer avoid those unwanted overdraft fees, but will improve customer relationships and provide a transaction of true value.

There will undoubtedly always be concerns over the safety of these mobile-led initiatives. We are noticing a number of cyber security incidents affecting businesses the world over, and experts are pleading with banks to collaborate with one another in the fight against cybercrime. Personally, I believe that the answer begins with how banks implement these ideas, and how they can be done well. Customers need to understand the value proposition of sharing their information – which is ultimately a better service. It shouldn’t just be a play by a bank to comply with rules and regulations – the primary goal should be to offer a practical service that becomes ingrained in our daily lives.

Think outside the box and create the best experience

The banking industry, by and large, is lagging behind when it comes to adopting new standards and ideas. Rather than leading the way with early adoption, financial companies often only change their ways when asked to comply with new standards and regulations. Intriguingly, anecdotal experience shows that banks and other financial institutions may be too defensive when it comes to sharing their information. However, once we can link various services with one another and see the bigger value, then the proposition becomes far more accessible for consumers and businesses alike.

Perhaps then, the financial industry should take inspiration from other industries and sectors – learning what works with consumers and translating them to the financial environment. Amazon Echo is a great example where voice recognition technology is being applied to deliver a personal experience for the consumer. Imagine such a degree of personalisation in the financial industry; voice recognition being used to transfer money from your phone, acting as a biometric security system only you can use. Or imagine a robo-advisor that recognises your voice and can tailor its responses based on your circumstances; a great proposition for banks to provide personalised customer service.

According to a money-mindset report by Fjord, 33% of Millennials believe they won’t need a bank in the next five years. Hence the need to reform and to do so quickly.

A great start for the financial industry of the future

The CMA’s recommendations could be revolutionary for the banking industry that’s so often on the back foot of innovation. By incorporating these proposals banks can begin to create a more consumer-centric, holistic view of finances, and help position themselves as more money-efficient. What’s more, banks can also improve their own standing in the market, by remaining competitive and offering consumers superior control of their finances.

Instead of safeguarding information and remaining so insular, the banking industry now has a great opportunity, with the rise of design and technology, to focus on extending and opening up their services. This innovation drive will result in giving customers exactly what they need; a seamless and enhanced service from their banks.

By Joydeep Bhattacharya, Managing Director at Fjord, Design and Innovation from Accenture Interactive

The financial industry could be on the cusp of monumental change. Just last month the Competition and Markets Authority (CMA) announced that it will be asking banks to enforce better policies and processes when it comes to consumer banking, providing access to finances and information through a single mobile app by 2018. This in turn, claims the CMA, will allow customers to reach better, more informed decisions regarding their money, and facilitate easier transitions to alternative services.

Joydeep Bhattacharya

A supporter of the CMA’s proposals, I do however have reservations concerning its presentation of ‘the mobile banking revolution’. These proposals go far beyond the mobile side of banking – so perhaps the more appropriate term to use is the ‘open banking revolution.’ In the eyes of the consumer, banks that offer a mobile service are simply meeting basic requirements. Thanks to their fluid experiences in non-financial industries, mobile banking is just the starting point. Customers now want and deserve more.

Becoming customer-centric in the digital age

The key thing to remember is that we as individuals interact with brands and businesses in various modes. At the base level we have rational or instant modes – for example, where we want to check an email or text on the fly. In some instances, this mode becomes exploratory; we want to carry out a series of actions in quick succession, to conjure up a bigger picture or to gain a better understanding of something. Reflection is also a key mode, where we take the chance to reflect on previous decisions and learn from them.

The banking industry therefore needs to shift away from those everyday transactional journeys and instead aim to design an exploratory and open-ended pathway. Customers don’t want to have to log into a mobile app in order to monitor their finances. They instead desire a service based on value exchange, which helps the customer achieve their goals. Whether this is a bank delivering extra assistance to finance a new car, or offering a more competitive rate on a loan to help book a holiday, it’s important to widen the customer experience beyond the basics.

The future of open-source banking

One of the CMA’s proposals is an open-standard Application Programming Interface (API), which banks and financial institutions will be able to incorporate within their existing applications and services. This standard will allow authorised parties to access information on banking services, prices and service quality. It will also facilitate the sharing of banking information between customers –with their consent.

A great example of an API already in use is with Google Maps. By overlaying your calendar data with maps and traffic information, the app can alert you to traffic snags and provide an alternative route. Applying this principle to the banking sector, perhaps the credit cards of the future will notify you by text message if you’re about to dip into your overdraft, and will let you top up or increase the limit on the spot. Not only would this help the customer avoid those unwanted overdraft fees, but will improve customer relationships and provide a transaction of true value.

There will undoubtedly always be concerns over the safety of these mobile-led initiatives. We are noticing a number of cyber security incidents affecting businesses the world over, and experts are pleading with banks to collaborate with one another in the fight against cybercrime. Personally, I believe that the answer begins with how banks implement these ideas, and how they can be done well. Customers need to understand the value proposition of sharing their information – which is ultimately a better service. It shouldn’t just be a play by a bank to comply with rules and regulations – the primary goal should be to offer a practical service that becomes ingrained in our daily lives.

Think outside the box and create the best experience

The banking industry, by and large, is lagging behind when it comes to adopting new standards and ideas. Rather than leading the way with early adoption, financial companies often only change their ways when asked to comply with new standards and regulations. Intriguingly, anecdotal experience shows that banks and other financial institutions may be too defensive when it comes to sharing their information. However, once we can link various services with one another and see the bigger value, then the proposition becomes far more accessible for consumers and businesses alike.

Perhaps then, the financial industry should take inspiration from other industries and sectors – learning what works with consumers and translating them to the financial environment. Amazon Echo is a great example where voice recognition technology is being applied to deliver a personal experience for the consumer. Imagine such a degree of personalisation in the financial industry; voice recognition being used to transfer money from your phone, acting as a biometric security system only you can use. Or imagine a robo-advisor that recognises your voice and can tailor its responses based on your circumstances; a great proposition for banks to provide personalised customer service.

According to a money-mindset report by Fjord, 33% of Millennials believe they won’t need a bank in the next five years. Hence the need to reform and to do so quickly.

A great start for the financial industry of the future

The CMA’s recommendations could be revolutionary for the banking industry that’s so often on the back foot of innovation. By incorporating these proposals banks can begin to create a more consumer-centric, holistic view of finances, and help position themselves as more money-efficient. What’s more, banks can also improve their own standing in the market, by remaining competitive and offering consumers superior control of their finances.

Instead of safeguarding information and remaining so insular, the banking industry now has a great opportunity, with the rise of design and technology, to focus on extending and opening up their services. This innovation drive will result in giving customers exactly what they need; a seamless and enhanced service from their banks.