You mightn’t be too familiar with open banking, but it represents another major leap forward in customer-centricity. Facebook’s head of financial services, Nick Tubb, outlines why this new system is of particular interest to marketing professionals.
When I talk to most people about open banking, the response is usually the same: “Huh? What’s open banking?”
That’s understandable. If you work outside the financial industry, it’s probably a very peripheral concept. Open banking in Australia also only really launched in July last year - a time when the pandemic was taking up a lot of headspace for us all.
Here’s how it works. The open banking system allows customers to share their personal financial information with ACCC-accredited third party providers. These providers then have direct access to customer's account information, providing opportunities for new products to be built that cater to changing needs.
Just last month, the Big Four banks across Australia began to share phase 3 transaction data with a growing list of these accredited providers.
But why would you give your financial information to anyone beyond your preferred bank? The short answer is: because the financial services sector is rapidly evolving and opportunities for consumers abound.
New user-friendly products are being developed by both Fintechs and established banks, giving people the ability to manage their money better. Other benefits, like getting a loan approved quicker or switching financial institutions more efficiently, are also on the cards.
Open banking is certainly a timely initiative, given that the challenges of the last 12 months have caused purse strings to tighten. People are rethinking how they handle their finances, while mass migration to digital platforms has changed the face of global commerce. A frictionless customer journey has become a priority for both consumers and businesses.
To learn more about how open banking is changing customer experiences, check out this handy explainer
Marketers, whether inside or outside the world of finance, now have the opportunity to embrace these core tenets of open banking themselves.
The reimagination of financial products and services, for example, will centre on putting consumers squarely at the heart of the experience.
Accordingly, new mortgage lending apps, spending apps which manage split bills, and investment apps are emerging to help people with these challenges. Marketers in other industries can take a similar approach by testing and learning with initiatives and products that make people’s lives easier.
And while open banking is a new concept, there are already some interesting products emerging. Frollo, for example, is an Australian-owned app that helps consumers track and manage their money through open banking1.
Others are following Frollo’s lead in developing platforms that empower consumers. New Zealand-founded investment app Sharesies (launching in Australia this year), aims to give its users the power to run and manage their own investments.
Solutions such as these are a catalyst for new business ideas and products in both the financial space and outside it. Investigating new customer-first approaches makes good sense too - helping consumers throughout uncertain times is a well trodden path in building brand loyalty.
Putting the customer first
Once an initiative like open banking arrives, the big challenge is to effectively communicate its consumer-centric features in a way that highlights their value.
Accordingly, well thought-out education around advantages and safety will prepare consumers for an experience that provides day-to-day convenience. This is something that is now gradually happening in the world of open banking.
Beyond implementation of new products and education, it’s also worth considering what’s at stake by providing a sub par experience in a world of increasingly digitally savvy consumers. It’s little appreciated in some quarters, but the projected opportunity cost of friction for businesses in Australia stands at $43.4 billion annually2.
Businesses that bring consumers products they don’t know they need yet - and get their education piece right - will find they have a more engaged and ‘sticky’ client base.
That’s why open banking is a welcome development. At heart it is another step to meet the growing expectations consumers have for frictionless, innovative and personalised experiences.
Even if you aren’t au fait with open banking now, you can still heed the lessons its roll out is providing. And without a doubt we’ll soon see the industry’s genuine visionaries doing just this.
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