How 'open banking' helps improve your customers experience
Open banking has become one of the main transmission levers of the digitization of financial institutions. Not only that, at present, it is an essential element to improve the satisfaction of their customers, who are increasingly accustomed to the agility and immediacy of the online universe.
In fact, one of the main objectives of open banking is to be customer centric and improve their experience. Its mission is to offer a type of product that best suits their interests, concerns, and specific needs. But how can open banking help improve customer experience?
Open banking is a model that allows banks to create new value-added services, as well as improve all kinds of processes: from registering to managing payments, identity verification, making notifications or analyzing consumption habits and commercial behavior, among other functionalities.
It also allows third parties to access certain information on customers of financial institutions when they so authorize, driving innovation and collaboration with other companies to create new products.
In this new technological ecosystem, APIs (Application Communication Interfaces) play an essential role, a standardized medium of exchange that allows you to connect two programs or apps together to share information or exchange messages. Thanks to these APIs, any programmer can develop specific apps that respond to the increasingly demanding needs of customers, while accessing their information and data in a much securer and easier way than before.
In Europe, open banking is regulated by the second Payment Directive, better known by its acronym, PSD2, an EU-wide mandatory regulation that entered into force in Spain on September 24, 2018. BBVA was a pioneer in this respect with the launch, back in 2017, of BBVA API_Market, the platform with which it provides companies and developers access to APIs of BBVA.
The customer at the heart of the business
In a digital ecosystem as interconnected as the current one, customer experience becomes much more important, since users are demanding new financial services that meet their needs anytime, anywhere and from any device.
This is where open banking finds its true calling. Open banking, as the Euro Banking Association highlights, is a customer-centric approach in the financial business: it is concerned about being aware of their habits, satisfying their needs and being one step ahead of them with innovative products. All this, while also aiding users to best manage their bank details.
Here are some of the opportunities that PSD2 and open banking open up, according to the report by the Euro Banking Association:
● Connect third party apps directly to a bank account and vice versa, e.g. for initiation of payments.
● Connect bank account data to apps, e.g. financial planning, and lending.
● Streamline login (identification and authentication) at third party websites (public and private) through existing banking credentials.
● Sharing information, (e.g. name, age, or email address) with third party websites after authorization.
The equation is simple: the more innovative and open the bank is, the more likely its customers can get useful apps for their profiles. Of course, third-party products and apps will only be used by customers if they are really useful and secure. 'The Open Banking Standard', guide published by the Open Banking Implementation Entity (OBIE), which coordinates the implementation of open banking in the United Kingdom, highlights a number of good practices to make the customer experience truly satisfactory:
● They must be intuitive apps, and the information must be easily assimilated in order to ensure informed customer decision making.
● Navigation must be simple and easy. There should be no unnecessary steps, slow loading, or friction between apps.
● The experience in third-party apps should be similar to that offered by the bank where the account is hosted. That is, it should involve no more steps, delay, or friction than the equivalent experience the user has when interacting directly with their bank.
● The interface must be familiar and trustworthy for the user, who must only need to use the login credentials provided by the bank managing their account.
Open banking is constantly evolving and although significant steps have already been taken, there is still a long way to go.
In the financial sector, competition is becoming increasingly important. In addition to traditional banks, other companies have entered, or will soon enter, the banking business, such as Amazon, Google, Facebook, and Apple. To survive in this highly competitive scenario, banks will have to modernize their systems, making them more agile, fast, and scalable. And above all, preparing for collaboration in a platform environment.
Thanks to APIs, banks and all kinds of companies will join forces to offer simple and intuitive interfaces that respond to user needs with innovative and personalized products. In this new ecosystem, the World FinTech Report 2019 conducted by CapGemini and Efma highlights that banks will not necessarily control the customer journey from start to finish, but it will be essential that they seamlessly integrate their financial services as a part of each user’s overall journey and experience.
In fact, as in other industries, this new collaborative economy can bring about new opportunities and sources of income for everyone. Within this process, each participant can lead those niches of the customer journey where they are more competitive and take advantage of the potential of the others.
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