Imagine a world where data is shared in an instant, including a customer’s bank statement. That world isn’t imaginative, it’s soon to be reality. This new data sharing ecosystem will provide a foundation that you can build on – fostering new, exciting relationships across your company and beyond. Why? To give your customers better service, better value and better experiences.
Open Banking is coming and many organisations are already on the front foot of change. Particularly those who are more agile. If used to its full potential, mortgages, product purchases and money management could sit right at the heart of your customer strategy. You can be more inclusive, more tailored and more aligned. The question many organisations are asking, however, is, how do I achieve this?
It needn’t be a struggle. It is about breaking down the wants and needs of your customers, understanding Open Banking and subsequent regulations and formulating a planned approach.
So, let’s do just that. Here’s six Open Banking examples that can help you maximise customer value.
Streamlined mortgage applications – make it easier to apply
Data sharing under Open Banking can deliver a much more streamlined mortgage application process for your customers. By consenting to share their transactional data electronically with a mortgage provider, customers can achieve huge time savings and avoid the admin associated with compiling and sharing paper documentation.
Real-time access to a customer’s statement information enables mortgage providers to make quicker, more informed decisions and reduce lending risks from a better understanding of a customer’s income and expenditure.
Data on income and outgoings can be integrated to provide a more comprehensive view of affordability. This is necessary to meet compliance requirements, as well as potentially helping to build stronger more sustainable customer relationships.
Use transactional data to streamline product comparisons
Price comparison sites already give customers a forum for researching and applying for financial and insurance products and services.
However, these search engines typically return hundreds of results, some of which are not always directly suitable for the customer’s needs. By choosing to share transactional data with price comparison sites, customers can benefit from a much higher degree of personalisation.
Using a rich data set such as transactional data, for example, could return fewer results that more accurately reflect the customer’s financial circumstances and their ability to repay any money borrowed. This makes the selection process for a product faster, more convenient and more satisfying for you and them.
To find the best products and services, and to apply for them, customers may not need to share their transactional data with individual organisations. Instead, they could choose to share data only with the price comparison sites. They can use these credentials and search against them for suitable products. This could make the process of finding and applying for products more secure. It can also be more convenient for customers through pre-populating data and pre-qualifying them at the point of application.
Savings on the weekly shop (and other things)
Many of your customers buy the same products on a routine basis. Whether that’s food, petrol or cleaning products for example. By having access to your customer’s transactional data, you can partner with retailers on the basis that you’ll provide personalised offers on the products your customers are more likely to buy. Inevitably, this will save them money and deepen your relationship, as you are seen to be responding to their individual needs.
You may be able to see exactly what a customer buys at the supermarket, how much it costs, and how often they buy it. Sharing this insight with one of your chosen partners could allow you to start creating personalised offers for your customer. Pricing their favourite products 20% lower than what they usually cost, for example. Or cashback could be tailored.
This is a great way to deliver tangible value for your customers and to save them money on their weekly shop. In addition, you can work collaboratively with other industries to benefit them further still. This is a great illustration of how Open Banking can foster new relationships and new data partnerships facilitated by the exchange of information, in real time.
Money management made easy – provide your customer with management tools
Managing money is a challenge for most customers, and household debt is at a record high (£200,882 billion in August 2017, according to the Money Charity). One way to deliver value for customers is to help them manage their finances better using dashboards and other useful financial tools.
Open Banking will enable you to show your customers their spending compared to previous months. The real monthly cost of servicing their mortgage, personal loan or car loan for example. But also the amount they should be spending each day related to their typical monthly income, and more.
With all this information represented in a simple, intuitive dashboard, customers would be able to get a better understanding of where their money goes, and make spending decisions that bring a huge positive difference over time. They may also be able to make better savings and investment decisions for products such as pensions, preparing more effectively for retirement.
Support your customer, at the right time
Often, you may find out your customers are in financial difficulty, when it should have been flagged to you sooner.
However, sharing data under Open Banking gives you the ability to better understand your customer’s financial situation, identifying whether they are at risk of falling into trouble sooner rather than later. The real-time sharing of transactional data will enable you to see if a customer’s income has fallen, or if their outgoings are increasing dramatically. In either case, it may be possible to re-engineer mortgage or loan repayments to reduce the risk of default, based on the analysis of a customer’s behavioural information. Or, offer better terms if applicable.
Other data such as credit scores can be used as triggers to prompt a more detailed review of your customer’s income and expenditure (where a credit score provides an initial indicator of a change in a customer’s financial well-being).
This is a great opportunity for you to engage with a customer at a time when they may need the help and support to see them through a difficult period. It’s a great value-driver as customers want to take control of their finances in a way that’s manageable and will avoid damaging their credit rating or being unable to maintain repayments. Demonstrating the value of data sharing in these terms presents a compelling argument for you to gain customer consent for data sharing.
Socially inclusive banking for everyone
Many areas of society have previously been denied access to financial services, even though they can afford them. One example would be customers in the private rental sector, who have been previously unable to use their history of monthly rent payments to demonstrate their credit worthiness, like a mortgage customer would be able to, for example. By giving consent to share data under Open Banking, those who have previously not had access to credit could potentially demonstrate their ability to pay, helping them get better and fairer deals.
The Rental Exchange can give another level of assistance too.
With the implementation of Open Banking extending into the rest of Europe from 2018 onwards, many EU residents that are new to the UK and taking up residency here could agree to share their banking data, from their European bank, with a UK provider. UK lenders can validate their finances much easier in the new Open Banking regime. This will likely help them to get quicker access to credit and banking services in the UK.
Open Banking is going to provide a whole range of new opportunities that can radically change the way we organise our lives. How successful it is will depend on the capacity of your business to educate your customers on the value of their data, and to build trust that encourages them to share this data. Open data sharing has the potential to fundamentally change the way customers and organisations engage with each other for mutual benefit. How you respond will be the key to your success in a world of Open Data.
To find out more, read our Open Banking blog series:
6 opportunities for growth using Open Banking
6 approaches for building customer trust and gaining consent for data sharing under Open Banking
How do you prepare for Open Banking? Here are 6 steps to get you started
Open Banking is coming – how do banks plan to operationalise it?