Anyone who thinks that a mobile banking app is simply a place where people interact with their own bank should think again. Banking is becoming a concierge service, providing consumers with an overview of all their finances, regardless of who they ‘bank’ with in the traditional sense.
Once logged in to a mobile banking app, consumers will automatically have access to any financial service and product on the market. But far from being a threat, it’s an opportunity for banks to offer a better service to their customers.
Traditionally, banks have been set up for an ‘exclusive’ relationship with their customers. They have relied on high barriers to switching to stop customers looking elsewhere. People wanting to move banks have had to ‘divorce’ their old bank to start afresh with their new provider.
This is about to change. Digitalisation and the rise of price comparison engines means that today’s consumers have developed a roving eye - always casting around for a better service tailored to their lifestyle. Most people today hold multiple bank accounts and financial products with several providers.
In January, PSD2 will turbo-charge this trend, breaking open the retail banking market. What will this mean in practice for the consumer?
The friction and frustration of switching will be a thing of the past. New technology will mean that people can onboard a new bank and bring their entire banking history with them. Financial data between old and new banks will be seamlessly tied together.
Imagine customers opening their banking app, and at a glance being able to see their entire financial life in one place. They can continue to manage their balance and payments of their old bank within the ecosystem of their new bank. If they’re paying too much for a mortgage, they’ll be able to switch at the touch of a button in the app. If there’s a better rate available for a savings account, they can transfer in an instant. Insights and advice will become actionable from a single screen.
It will even mean that people can use all of their new banks’ services, without ever opening a single product with them.
The role of banks will change to reflect this. Personal finance management and product sales will become their primary services. What’s more, they can be offered to anyone independent of who they bank with.
Banks will develop a more advisory function. They will be able to nudge customers to the services or products which best suit their needs. With a fully transparent market, consumers can pick the best product suited for them.
For example, a bank will be able to see the mortgage rate that a customer is paying with another provider. By pointing the customer towards a lower rate, they’ll not only provide a better deal for them, they’ll also deliver a superior experience.
With lower barriers to switching, and the ability to sign up customers in less than a minute, this is a huge opportunity for banks to win new customers and upsell existing ones.
In the future, this will all become automated. People will give their banking service permission to switch them onto the best product without them having to make an active decision. This will be money on autopilot.
Opening up banking services to everyone, regardless of where they bank, will allow forward thinking banks to win customers who crave a better way to manage their money. Banks that embrace this new model of banking will enjoy first mover advantage. In this new landscape, the early adopters will be the heroes.
Banks that resist will be left behind. With barriers to switching falling away, and with appealing new services being offered at the touch of a button, savvy consumers will no longer be confined to their traditional bank. Those that hesitate will miss the moment, while those that take the leap will reap the rewards. It’s up to banks to decide whether they’re winners or losers in the new banking revolution.
The latest EBA Opinion calls for the removal of obstacles that obstruct TPP’s access to accounts for open banking services. Here’s our take on the most important bits of the Opinion, and what it means for banks and TPPs alike.
We interviewed Matteo Concas, Head of Global Digital Banking Solutions at Enel X. Here’s why one of the largest energy companies in Europe is looking to financial services – and open banking – to bring more value to their customers.
Gone are the days when banks and fintechs battled for the financial services crown, as collaboration proves king. Tink’s Rafa Plantier takes a look at how banks and fintechs have worked out they’re better together.