The winners of open banking


Open banking is bringing welcome transparency and innovation to an industry that historically has been shielded from disruption. Who will be the heroes of the new financial services era, and who will be left behind?

Up until recently, banks have been operating in a market that has suffered from lack of transparency and liquidity. Then, a couple of tech companies came along that challenged status quo and both rebuilt and redesigned the digital banking experience – opening the eyes of both consumers and banks. By bringing welcome disruption to an industry that did itself and consumers a disservice, banks are now facing more competition, but, also the opportunity to get the consumers they truly deserve.

As our CEO often states – “this might be the most exciting time to be a banker”. Most have felt the shift in power from the bank to the consumer, who are now able to share their financial data with the best provider for them. And bankers are working out how to tackle, and leverage, open banking.

While most businesses have got their heads around what open banking means, they must now meet the sky high expectations of user experience, products and services that have been spurred by challengers bringing new options to the market. Those that add the most value will be rewarded by keeping, and winning, people’s business. If they don’t, there are plenty of fintechs, small and big, who are lining up to fill the gap.

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Technological disruption

For the last decade technology has been disrupting industry after industry, changing the way we live, work and communicate. The three biggest disruptors have been mobile devices, cloud computing and big data.  

In the past, many businesses were both the supplier and the distributor of their products and services. They owned the physical branches or stores, and they “owned” the relationship with the customer, who probably had only a couple of providers to choose from.

Now, companies are using these technologies to offer more personal services that work quickly and seamlessly, aiming to improve the quality of the user’s life.

Today, you can order a cab on your smartphone, tell it where to pick you up and take a ride without ever having to use cash or a credit card. An app can watch flight prices and tell you the cheapest time to book. The best thing is that these are not remarkable experiences. They are common. They are expected.

While only some people might take a flight or grab an Uber, the majority of people bank. Everyone will have to change with the tide, and it’s the ones who figure out how to use technology to deliver a personalised customer experience who will win.

Trusted services

Banks often talk about the importance of trust. People want to know their stuff is safe, that their best interests are at heart and they won’t be screwed over. But that’s exactly where some banks have struggled.

Challenger banks, like Monzo are distinguishing themselves by relentlessly focusing on proving their products. But its dramatic success is not because of product features or its speed of innovation. It’s trust, because people are treated as individuals and feel understood.

Banks can get stuck in a risk-aversion rut, wanting to defend the trust they have with customers. But the truth is people will give you up in a heartbeat for a better experience.  

Tink has seen from its own experience that people willingly share their financial data with an unfamiliar company, particularly if it leads to a better deal and a nicer experience. Traditionally, banks always had the competitive advantage because they had the data. Now banks are waking up to the reality that their customers will be free to go wherever they find the best experience.


Tailoring to a ‘segment of one’

Many banks are dealing with legacy systems that pre-date the internet, and most didn’t even have native banking apps until late 2010. We are now moving to a future where branches, ATMs and cards could all be digital. Bankers could even be machine-learning algorithms that learn your preferences and personality to offer recommendations.

To win at this game, businesses must relentlessly focus on the user, creating personalised products and services. Tech and media companies own this space, as they leverage their data to do it for the masses.

Netflix uses hyper-personalised recommendations to save more than $1 billion each year because fewer of us get bored and cancel our subscriptions.

Spotify gained 20 million new listeners in 2017, discovering that people were spending 25% more time listening to music on their platform because of their personalised playlists and discovery tools.

They’re successful because they’ve figured out how to harness the data they collect. They know exactly how their products perform, how users respond and ultimately, what those users want from the service.

Banks have a major advantage in this area. They can see the full picture of their customers’ financial lives, observe and predict life events, and tailor offerings that go beyond financial services. And, they have the budget, customer base and brand knowledge to be able to execute on a larger scale.

This could be analysing transactions in real time, offering winter sports insurance when a user has just booked a ski trip. Or suggesting better places to hold money than in untouched savings accounts. The possibilities are endless. The only way to succeed is by constantly giving people a reason to actively choose you.

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The banking heroes

When people have the power to cherry-pick the services they use, you must earn and deserve their business. Those who don’t adapt, or change too slowly to compete at scale, will be left behind.  

The heroes will be those who understand that our future relationship with finances will be nothing like they can imagine today. Technology and data will be used to imaginatively deliver better experiences and products, with a relentless focus on customers’ needs. The rewards will be consumer trust, a great reputation, and ultimately commercial success.  

The good news is the possibilities are endless. We’ve been doing this for seven years, and we’re still only scratching the surface.


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