In today's rapidly evolving banking industry, technology and user experience play a crucial role in providing innovative financial solutions. The emergence of digital platforms, mobile banking apps, and online payment systems has fundamentally changed the way customers interact with banks.
Customers now expect seamless and convenient digital experiences, forcing banks to invest heavily in technology and user experience to stay competitive. So, now the majority of banks have their own modern and intuitive apps, how do they differentiate themselves?
The products that banks offer remain largely the same from institution to institution; current accounts, savings, loans and mortgages, ISAs and so on.
The key to thriving in this disruptive landscape will be going beyond surface-level advancements and shifting from product centricity to customer centricity and personalisation.
And banks can only truly become customer-centric by adopting Open Finance technology.
The value of Open Finance
Open Finance offers a transformative opportunity for banks to gain valuable insights into their customers' financial lives, personalise their offerings, understand their customers better and help improve their financial health, ultimately driving growth and customer loyalty.
Gain Valuable Customer Insights:
Open Finance allows banks to tap into a wealth of financial data, providing a comprehensive view of customers' financial lives. By leveraging this data, banks can gain insights into the products and services customers hold with competitors. This helps banks personalise their marketing strategies and tailor their offerings to meet customers' specific needs and preferences. By providing tailored solutions, banks can increase customer engagement, stem leakage and attract new business.
Personalised Marketing and Services:
Equipped with detailed knowledge of customers' financial situations, including their holdings with competitors, banks can offer personalised marketing messages and services/products that resonate on a deeper, more individual level. By tailoring recommendations and offerings based on customer needs, banks can enhance the customer experience and create a real sense of trust and loyalty. This personalised approach allows banks to stand out in a crowded market and win over customers who value personalised financial solutions.
Driving Customer Primacy:
Open Finance empowers customers by putting them in control of their financial data and fostering transparency. Banks that embrace open finance demonstrate their commitment to delivering customer-centric solutions and help customers take control of their finances. By providing comprehensive financial insights, personalised services, and tools to improve financial wellbeing, banks can build strong relationships with customers, who will see these banks as instrumental in helping them achieve their financial goals, resulting in increased satisfaction and loyalty.
Increase Customer Potential:
Let’s say a bank onboards a new, younger customer who is just getting established. They may have some debt, no savings and a low-level of financial literacy leading to feelings of anxiety and confusion with where to start.
If that bank’s offering is centred around financial wellbeing and built on Open Finance, they can help that customer take control of their spending, encourage micro-savings to clear debt and eventually build an emergency cash fund. As the customer’s financial health improves, they may find more money at the end of each month to save for a rainy day fund, or even towards a first house.
Savings capacity depends upon people having available money. At Moneyhub, we call this available money Potential. It’s the money left after non-discretionary spend is subtracted from income.
When that customer is in a place to start looking at or applying for a mortgage, who will be at the forefront of their mind as a trusted, helpful mortgage provider? Their bank who helped them reach their financial goals in the first place.
By helping customers increase their Potential, banks can ultimately boost their own assets.
The future is customer-led, not product-led
In a world where customer expectations and competition are constantly evolving, embracing Open Finance technology is essential for banks seeking to maintain long-term success. By leveraging the power of Open Finance, banks can gain valuable customer insight, personalise their marketing and services, and build strong relationships centred around customer primacy and financial wellness.
It also makes sense that there are a number of ways Open Finance can help you comply with Consumer Duty, the most customer-centric regulation to touch financial services.
As technology continues to shape the banking industry, it's the banks that prioritise understanding and improving their customers' financial health, placing customer, not product, at the heart of their strategy, that will thrive in this disruptive landscape.
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