Open Banking – What do Consumers Want?
Last month several consumer organisations met to create a ‘Consumer Manifesto’ for Open Banking. The objective was to set out their expectations to inform and direct the industry. The authors claim that Open Banking discussions have been dominated by technology and standards. They believe there has been a lack of discussion about the products and services which will bring benefits to consumers.
A copy of the report can be found here.
Summary of the Report
This report provides an overview of what consumers need from the market, what the market needs from Open Banking and what Open Banking needs next. The report is split into three parts. Part 1 explores different consumer needs; how their needs might be met through well designed Open Banking-enabled products and attempts to calculate how much these products could save them. In Part 2, they consider what more is needed from Open Banking, the technology and regulators to bring about good consumer outcomes. In Part 3, they conclude with some suggestions about where the industry might go next with Open Banking so that the full value of its potential can be realised for consumers. The key findings are:
- The report breaks the market into clear customer segments and quantifies the potential savings. The authors believe that people could stand to gain £12bn from Open Banking-enabled services over the course of a year. Overall, those on lower incomes stand to gain most.
- To realise all the value, consumers need products more closely tailored to their needs, which are designed to engage them more meaningfully and really enhance their lives. Access to transaction data allows firms to offer services at the exact point in time when a consumer needs them, reducing the background noise and offering something genuinely valuable.
- The UK’s 5.7m small businesses stand to gain significantly from Open Banking-enabled solutions. The report estimates that each business could generate benefits worth £1,083. These would be delivered by:
- New tools to enhance productivity and deliver enhanced insights into business performance
- Automated tools to optimise cashflow and help small businesses earn returns on credit balances
- Improved and more competitive access to relevant financial products
- Reduced costs to make payments and get paid – particularly on international payments
- The report concludes by proposing that delivery on the priorities in full will require a new regulatory regime to oversee this segment of the industry. Given that trust in the process is going to be important for success, then ensuring standards are met will be critical for the industry to succeed.
Our view on Open Banking
We agree that too little time has been invested in the propositions and the report puts a new perspective on Open Banking. However, our greatest concern is that many financial institutions are still unable to adequately test and launch new technology in a secure and risk free manner.
One of the biggest issues facing the industry is ensuring that legacy systems can work harmoniously with new technology. Until organisations change the way they approach the testing and launching of new technology then innovation will continue to be more expensive and fraught with challenge.
You can read more about our view on this in the following articles:
Alternatively, call us on +44(0)113 243 0004 to discuss Open Banking and how to successfully launch new propositions.