The Australian Federal Government has announced that it aims to introduce an open banking regime which will give customers more control, choice and convenience in managing their money. What does this mean for your business models and customer strategy though?
In the face of this disruption in the Australian and global financial industry, it is evident that both regulatory and customer-led pressures will open up the market to new entrants and disrupt what and how customers are purchasing.
Some banks have already chosen to embrace the open banking transition, working with European leaders, emerging Fintechs, and developing an open banking strategy ready for the transition.
Ahead of the Open Banking Summit 2018 we look at these strategies in more detail and explore how Australia’s biggest banking and financial sector businesses are preparing themselves for the open banking revolution.
Open Banking is both a threat and an opportunity for traditional lenders. The threat comes from the fact that banks will no longer be able to control their interaction with their customers – a big banks mortgage could theoretically be sold by a fintech or tech titan, for example.
In practice, this means that instead of doing all of their banking through one or two firms, customers could have their current account with one provider and then bolt on other financial services such as an insurance policy, mortgage and investments through other providers, all under the user interface of their choosing.
From a customer point of view it really is a win-win. The only ones to lose out will be the brands that refuse to innovate and embrace open banking.To stay ahead of the competition banks need to embrace innovation and begin forming frameworks for operations in the open banking era.
Hear more about embracing digital disruption and embedding corporate innovation from Scott Thomson, Customer Solutions & Innovation at Google.
Working with Regulators
Open banking will become a driving force behind the progression and innovation of the financial services sector. While open banking will give customers greater clarity, control and ownership of their data, opening the sector to further innovation and increasing competition, there are some concerns with how some of these initiatives will impact the security of consumers’ bank account data.
Cyber security and the safety of customer data is obviously a priority for the banking and financial services sector already, but with open banking initiatives coming into play later this year, data security will become more important than ever.
According to an online survey by consulting firm Accenture released late last year, all but one of 100 payment executives at major banks globally said they were planning major investments in open banking by 2020, with 50% agreeing that implementing the emerging concept increased security risk.
However if carefully managed, with new regulations and frameworks developed to support it, open banking could actually provide greater data security with archaic practices like screen scraping becoming obsolete.
Hear more about strategically working with regulators for increased cyber security from Erik Fenna, Chief Information Officer, P&N Bank.
Service as Differentiator
Open banking is meant to improve customers’ banking experience in several ways. It forces large, established banks to be more competitive with smaller and newer banks, ideally resulting in lower costs, better technology, and better customer service.
In today’s rapidly evolving digital world, consumers are habituated to services that are personalised to their wants and needs, and expect the same from their financial services. Open banking will open up the door to smaller players, and in order to differentiate yourself from competition, customer experience is key.
It is estimated that 60% of customers utilise a smartphone for their banking, and they are looking for apps that are simple, streamline, yet all-inclusive. In order to stay ahead in an environment that is ever digitising, and more competitive than ever, banks need to developed a streamline digital strategy that grants customers immediate access to the banking services they want in a convenient and seamless way.
At the Open Banking Summit 2018 Raghavendra Bhat, Head of Technology- Digital Channels at ANZ explores the use of technology in service differentiation.
Human Centred Design
While open banking threatens long-established banks by increasing competition and opening up the market to competition from new contenders like Amazon, Facebook and Google, it does however provide an opportunity for banks to similarly take advantage of this new technology to create improved experiences for their customers
A movement towards open banking can be seen as an opportunity to reassess your customer experience strategies. With digital acceleration set to disrupt financial services, it’s time to rethink how to best attract and retain digital customers.
By focusing on human-centred design and creating product and services that focus on customer life journeys banks can stop providing micro products and instead focus on creating a holistic customer experience that support the customer journey from start to finish.
To hear more about leveraging human centred design to holistically support customer journeys join Ben Stokes, Head of Digital Experience and Engagement at Credit Union Australia at the Open Banking Summit.
Collaboration & Acceleration
The potential power of Open Banking to disrupt the Financial Services market is clear. It will make it easier to manage money and compare offers. It should widen access to existing products, like credit, debt advice or financial advice. The key factors are the rate of customer uptake as well as banks’ and FinTechs’ ability to engage constructively to generate compelling new offers.
With the global financial sector facing disruptions from new, start-up and Fintech led technologies, an innovative approach, instead of resisting disruptors, is to collaborate with the Fintechs, who embrace these new technologies to better position your business in the open banking era.
The goal is not to have control of data – but to use it to create innovation and great service for customers. Banks have customer trust, are regarded as secure and compliant and can deliver large scale implementation. Fintechs have agility (partly due to a lack of legacy IT), a youthful approach and a more natural understanding of social media. To elicit real change banks and Fintechs need to effectively work together.
Hear more about harnessing partnerships with Fintechs and start ups to drive innovation and improve value propositions from Andrew Bell, Head of Information Technology at Bank Australia
From a technology perspective there are a number of key innovations that are gaining real traction here and overseas for their ability to disrupt the financial services sector by opening up customer data to sharing with third parties.
Cloud, particularly Platform as a Service (PaaS) and Software as a Service (SaaS) is lowering the barrier to sophisticated financial applications by allowing people and talent to focus on business value added tasks as opposed to the building, supporting and managing of infrastructure.
Advanced AI and Machine Learning techniques are allowing data scientists and researchers to reveal non-obvious patterns in complex, high dimensional data, and Internet of Things is allowing real-time sensors to continually assess businesses and assets financed and create new partnerships between them.
By taking advantage of these new technologies incumbent market leaders are faced with the opportunity to vastly improve services and product offerings – thus helping to retain brand loyalty, trust and market share in the open banking era.
Hear more about harnessing technology to improve service from Drew Unsworth – Head of Digital Banking Transformation and Performance, Business Bank at Westpac.
If you’re interested in hearing more about any of these strategies, and exploring in more detail the frameworks developed to support and prepare banking and financial sector organisations for the open banking revolution, then join us at Open Banking 2018.
The event, held in Sydney on the 19th – 20th of June brings together over 20 financial sector and open banking experts from the likes of Westpac, Alipay, Optus, Barclays, ANZ, Suncorp, Xinja, Google, Bank Australia, P&N Bank, Bankwest, Bpay and Credit Union Australia.
To secure your ticket to the event, and for special early bird pricing simply fill in the registration form and email to firstname.lastname@example.org.