Helping consumers understand that Open Banking is smart banking

Member of Elliott, Mambu CCO helps us understand how Open Banking is supposed to give customers more choice and options and why it has the potential to build loyalty and profit for financial institutions

The digital banking movement has been supercharged over the past 18 months. As physical branches closed and public anxiety about handling cash peaked, the pandemic has seen digital banking go from enjoyable to necessary.

But banks shouldn’t assume their customers are comfortable with this rapid change in the way we manage our money. There is work to be done if the industry is to keep customers engaged and using digital channels, especially with the implementation of Open Banking.

Three years have passed since the first adoption of Open Banking – but have we seen the best of its capabilities and passed it on to consumers?

Open Banking was supposed to give customers more choice and options, but it is perhaps one of the most misunderstood recent developments in financial services.

Financial institutions may be missing an opportunity to build customer loyalty by showing them how useful Open Banking can be. The most popular financial brands are those that consumers find helpful and empathetic.

For banks, Open Banking has the potential to build loyalty and generate profits, but customers don’t know what Open Banking really is. To be truly customer-centric, it’s time to show customers that it’s just about “smart banking”.

What do consumers think?

To better understand how people view and use Open Banking today, we surveyed 2,000 global banking customers. Our recent research revealed that nearly half (48%) of respondents are “afraid” of Open Banking. This is due to the principles that allow third-party providers to access customer data to provide a range of digital and online financial services.

The data-conscious consumer

Nearly three in five customers believe Open Banking is a dangerous use of data sharing, while more than two-fifths (43%) indicate that data sharing is their top banking practice concern.

Much of this anxiety stems from the very driver of its increased adoption. Although COVID-19 has accelerated the use of open banking, it has also led to the rise of the “data-aware” consumer.

The pandemic has had a fundamental impact on public opinion on privacy, with 40% saying it has changed their attitude towards data sharing. As consumers become more aware of the data they share with financial service providers, it has never been more important for banks to engage with their customers on these issues and devote more efforts in education.

The Open Banking Opportunity

But all is not gloomy. At a time when job security and certainty about the future are scarce, more than half (52%) of consumers say they want more control over their finances.

As a result, demand for Open Banking services is growing exponentially. Nearly half of consumers (48%) want instant digital money transfers and more than a third (38%) want aggregated bank balances to have a 360-degree view of their spending.

Budgeting and saving also moved up the priority list, with a third (34%) of consumers wanting advice on how to better manage their money and a quarter (26%) seeking suggestions for saving money on their bills.

This presents a huge opportunity for banks to talk to their customers about how digital and online banking can help them. Now is the time for Open Banking to deliver on its promise: to improve the way customers move, manage and get the most out of their money.

So what’s holding him back?

Afraid of the unknown

If banks want to reassure customers about data sharing and dispel harmful myths about privacy, they need to better explain these services. Part of the problem is that customers don’t understand what Open Banking is. And people are afraid of what they don’t know.

After all, customers don’t need to know what Open Banking is. But they want to know what it does for them and how it will help them improve their lives. Whether it’s seeing all their financial information in one place, getting faster loan approvals, or getting their bills paid faster and more securely.

Open wide opportunities

Open Banking enables innovation and personalization in scenarios that institutions cannot yet predict. This means more opportunities to differentiate and offer personalized services that keep customers engaged. Financial institutions can capitalize on this potential by getting to know their customers better, providing them with the information they need to make informed decisions, and ensuring that consumer concerns are mitigated.

Rather than trying to explain the use of APIs and PSD2, financial service providers should focus on communicating the full value of Open Banking and the benefits it can bring. Align messaging with the features customers value most, such as transferring money between different accounts and viewing multiple account balances at a glance, and always stress that data and privacy are a priority .

The result? Increased trust and willingness to embrace the benefits of Open Banking by end users, leading to greater adoption of new innovative solutions and fintech services.

This interview was originally published in the Open Banking Report 2021. To download the report, please click here.

About Elliot Limb

Elliott Limb, Mambu CCO, has deep knowledge of the financial industry and has held leadership roles in major global and regional banks and fintechs. Elliott is focused on building partnerships to create scalable solutions for a range of customers.

About Mambu

Mambu was launched in 2011 with the aim of providing free access to modern financial services for everyone. The only true SaaS cloud banking platform, Mambu’s unique composable approach enables the assembly of independent components and systems to meet the needs of your business and your customers.

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