How will Open Banking impact the customer experience?
By Tanmaya Varma, Global Head, Industry Solutions, SugarCRM
We’re only a few weeks into 2017, and it looks like the financial world is set for another year of transition as innovation will shake up the experience retail banks offer their customers. Over the last few years, we’ve seen the rise of the empowered customer, which will continue to evolve as legislation gives customers more power and choice in the managing their finances. Nowhere is this truer than with the introduction of Open Banking which, after much discussion since its 2015 launch, has finally begun to roll out.
The Open Banking Working Group (OBWG) was set up in September 2015 at the request of HM Treasury to explore how data can help people transact, save, borrow, lend and invest their money.The OBWG has set out an Open Banking Standard(OBS) to outline how open banking data should be created, shared and used by its owners and those who access it. It will make the sharing of customer information more transparent across the industry by opening up a network of APIs to access customer data.The idea is that, by making it possible to share data that banks have historically held, the customer’s experience will improve as data can be used to build useful applications and resources to help people find what they need. This is a significant step forward for the way major UK retail banks including Barclays, HSBC, Nationwide and Santander manage their digital customer data.
However, a crucial point to note is customers will have to give their “informed consent,” to allow banks to share customer data.With a fresh data hacking scandal hitting the headlines every week, it’s understandable that customers seek reassurance when it comes to deciding how their personal information is shared – so there will be even greater pressure on banks to keep customer data secure.
Putting the power in the hands of customers
The OBS will empower customers to choose the best financial provider to suit their particular needs. It will allow them to look for mortgages and investment accounts more easily, and to clearly compare and contrast the different products and services offered by banks. It really is the time of the Empowered Customer; they are now more knowledgeable and connected than ever before, with an unprecedented level of choice of products, brands and services across every industry.
Customers now use an array of digital channels to contact companies with questions and complaints, and expect 24/7 communication that fits their lifestyle. And, this is all crucial to the way customers form their expectations, as they compare and contrast brands and service – irrespective of the industry.
Customer experience is now the benchmark for success: research by Gartner found that 89% of organisations now expect to compete solely on this.What’s clear is customers want more from their banks than favourable interest rates. They want to know they are valued; they want a personal, quality service.With customers able to switch more easily, banks now face an even larger challenge when it comes to standing out from the crowd and encouraging customers to stay with them.
Don’t forget the human touch
The banking industry is a fiercely competitive space where traditional banks and fintechs both seek to attract customers through increasingly innovative ways. Nationwide, for example, has been investing in behavioural biometrics which learn and adapt to the user’s behaviour, and CaixaBank in Spain now provides customer service via WhatsApp. TheOBS recognises this, and seeks to help improve competition and efficiency, and stimulate innovation in the banking sector. Small and nimble start-ups such as Atom have the head start on digital transformation, but I strongly believe that, after years of being a familiar sight on the high street,what traditional banks offer is an established, human experience.
People still like to talk to people. Indeed, a report by market researchers Vanson Bourne found that 91% of respondents agree that there should always be a way to contact a real person, with the same number believing complicated issues are more likely to require a real person to resolve it. Digital innovation has hit the financial services industry and it has undoubtedly revolutionised the way customers manage their finances. But money matters are complex and personal.
I would argue the personal and individual approach of a phone call or in-branch appointment will always be needed to deliver the best experience, especially when it functions in seamless conjunction and cohesion with the digital and non-human channels. Of course, managing data effectively in back-end systems is crucial to the customer experience delivered at the front end. Banks must constantly look to innovate to ensure their employees are using the best systems and work-flow tools to manage data and deliver a great customer experience.
A new dawn for banking
The next few months is just the start of a new era for UK banks. In the first quarter of this year, third parties will be able to access personal customer data sets via the Open Banking API on a read-only basis.The full scope of the OBS, including business, customer and transactional data, should be reached by 2019.It’s an interesting time, and I’ll be intrigued to see how customers, and banks, adapt to the new experience. But the bottom line is: for any bank, whether it’s been in business for 50 years or 50 days, the need to provide a seamless customer experience and manage customer data efficiently and securely remains the same.
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