Open Banking: Redefining The Private Banker

John Bertrand

A retail banking revolution is underway. Evolving customer expectations, shifting platforms, re-imagining business models, and, most of all, innovative digital technology has created a new playing field for businesses.

In the same way Amazon shook up brick and mortar stores and Uber reshaped the taxi industry, traditional financial services firms are now facing a similar threat of disruption from the new kids on the banking block, such as Monzo. Nowadays, banks can offer cash bonuses of up to £200 plus a hotel stay to switch to current accounts, and it has never been more tempting for customers to do so. “How can banks engage the customer in this digital world” is the question, and the answer is we all want our own “private banker.” Technology can now provide personal financial assistance and proxy banking to get you through every month without expensive overdrafts.

With open banking, private banking can be available to all.

 Let’s get predictive

In the age of immediacy, ATB Financial is able to connect customers to the right product at the right time and accelerate the onboarding and activation of new customers and products. By making use of Big Data and predictive analytics, ATB Financial gained customer insight, enabling them to anticipate the behavior of its customers. This level of visibility into the customer profile allows ATB Financial to respond to and predict its customers’ needs, engage them in real time, and provide the best product offerings. In a saturated marketplace, personalized engagements are the key to surviving and thriving in today’s digital economy. Not only do banks need to meet more sophisticated customer expectations, they also must navigate the regulatory landscape on behalf of themselves and their customers. 

Ushering in the open banking evolution

Last year the Competition and Markets Authority (CMA) released a report that found large, established banks don’t have to compete hard enough for customers’ business, and that new entrants into the industry are finding it difficult to grow. A wide-reaching package of reforms will be implemented in 2018. Banks will have to work harder to attract and retain customers as third-party firms join the new banking party. The open banking evolution encourages proxy banking. That is, everyone can have their own electronic private banker who looks after their financial health and, with their consent, makes payments and savings and avoids expensive lending fees. Customers will be able to have their finances managed and safe-guarded without the tedium of administration.

The open banking evolution will give customers visibility into all their accounts, even when they’re with different providers. Technological advances and legislative changes introduce new competitors and additional regulatory pressure to banks, shifting bargaining power to customers and their third parties.

Open banking will continue to create opportunities and challenges for banks because it encourages new ways of engaging customers, partners, and competitors by introducing the third-party provider. And the revolution is well underway, with HSBC announcing that it’s testing the HSBC Beta app, which gives 10,000 customers a “joined-up view of their financial life,” according to Becky Moffat, the bank’s head of personal banking. The app will track personal goals and give customers helpful nudges if they spend too much.

These convenient features will become de facto standards to personalization, safeguarding measures to your wealth with added well-being. What is certain is that the customer experience bar will be forever rising, with banking customers expecting nothing less than their own electronic private banker, and this may be a tipping point for all.

In the face of an evolving regulatory landscape and shifting consumer expectations, discover what it takes to stand out from the crowd and engage the unengaged customer.