Open Banking: Incentivising a nonplussed nation
Yesterday, the FT passed comment on how Open Banking had been met with a collective shrug by the UK public. Despite the revolutionary prospect of shared consumer data across financial services, no one seems to care. As the FT says...
"So have people been rushing to sign up for these revolutionary new services? Not exactly. Almost seven out of 10 people say they would be reluctant to share their financial data with third parties, according to a recent survey by Accenture published this week."
This is a missed opportunity. Of course, the public will always be reticent to embrace change, especially when it comes to data. But Open Banking will improve competition, drive down prices and pass on savings (and growth) to the real economy. So why isn't the public showing more interest?
The answer lies in communication. Or a lack of it. The public don't know what Open Banking really is. And, if they do, they don't really understand why it would benefit them. And whose fault is this? The regulators? The public? The banks? The fintech community?
Regulators regulate, they don't educate, so they shouldn't be doing the job of championing a cause they only need facilitate. And the public will show enthusiasm when they're made aware of something worth getting excited about. They are also well within their rights to feel cagey about sharing data. Until the risks are fully explained, they are right to not want to take any risk at all.
So, banks (slow to digitise) and the fintech community (slow to communicate) are on the hook for not effectively broadcasting the long-term positives that Open Banking will bring.
Fear not, Open Banking is a long-term project, so it will be no surprise if 2018 is the year when we all tested and found out what works for consumers, banks and fintech companies. But banks and the fintech community must be doing more to make users aware of possibilities now available.
It's likely that most bank customers who aren't plugged in daily to the financial press will only have a cursory understanding of what Open Banking actually is and how they can benefit. And that's a real shame. Until that changes, they won't take any action and Open Banking focused apps and platforms will struggle to gain traction as they struggle to find new users.
Here are 3 ways that banks and the fintech community can do Open Banking better -
1. Talk to customers or die.
Building a beautiful Open Banking-focused product is really great... But it will be useless (and the code will be owned by a bankrupt startup) unless the public wants to use that product. This is Startup 101. "Build it and they will come" does not work. So fintech companies should be taking a step back right now and listening to customers about what they want. This should be done in person. Pick up the phone. Send an email. Speak to your customers and find out a) whether they actually know about Open Banking and b) if they do, why aren't they doing something about it? Then you should react/pivot/fill out a DS01 accordingly.
2. Banks need to get closer to the startup community. And vice versa.
There is still a huge gulf between the old and the new, the Square Mile and Shoreditch. However you want to say it, in-house resources Barclays and RBS are still far too wary and concerned about Monzo, Curve and Coconut, when, in fact, they should be doing all that they can to work with and collaborate with these upstarts. The opportunity of Open Banking is community-wide and will only truly be realised by companies (big and small) working together. If you're Head of Innovation at Barclays, ring Coconut and find out what's happening on the other side of the fence. If you're CMO at Monzo, email the Head of Tech at RBS and discuss how best you can make the brave new world of Open Banking a better place. Park your egos. Reach out. After all, a rising tide lifts all the boats...
3. Outbound marketing and communication is the key for all involved
All companies - from global behemoths to two-man seed startups - should be producing better communication for their clients and users around the subject of Open Banking. At E&E, we see a lot of this stuff and most of it is complete rubbish. Be smart. Be simple and clear. And begin communicating in a clear and concise way about the benefits that your customers can enjoy. They'll thank you with loyalty in the long run.
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Open Banking was always going to take time permeating the economy, but banks and fintechs should be doing a much better job telling customers about the possibilities and the upside. It's a huge opportunity, a tap-in, an OPEN goal. The companies who deliver will win big.