Banking is one of the most data-rich sectors.

Customers leave a digital footprint and insight into their behaviours and motivations at multiple touchpoints.  Customer-centred banks like First Direct use this big data to create a superior customer experience. The bank regularly wins a gong for customer service.  It is shortlisted for this year’s Which? Banking Brand of the Year alongside Nationwide and Starling Bank.  The judging panel takes into account everything from customer service to value for money to breadth of offering and innovation. This includes results from satisfaction surveys.  First Direct knows its customer.  It finds new ways to innovate and compete with FinTech challengers that are bringing new products and services to market targeted at personalising customer experience.  Open banking and data is now the key battleground.

First Direct has been quick out of the starting blocks on this. The bank’s head of digital John James sums up the competitive threat for incumbents in a nutshell: “Open banking is a fundamental challenge to an incumbent provider in terms of how to start using that data to provide a better service to customers in order to retain them, because we’re very much aware that if we don’t, someone else will”.

Falling behind the customer curve

The data challenge has been on for years. Open banking has accelerated the need for banks to use the mountains of data they collect to create a better customer experience.

Customer demand for more control and ownership over their data to receive personalised offers, budget and effortlessly manage their finances in one place is growing fast.  Just-released figures from The Open Banking Implementation Entity show that open banking usage in the UK is rapidly increasing.  There are now two million active monthly users here.  The figure has doubled in the past six months since the Coronavirus pandemic broke.

But most banks are still in the nascent phase.  Banks that are quick to innovate will win out.  As Innopay Senior Manager Mounaim Cortet told Consultancy.eu: “… banks that get their open banking strategy right will establish credibility and a footprint in the data economy as a stepping stone for future relevancy and new business models”.

The big open banking challenge

Consultancy.eu also reports that many banks are in the early stages of providing access to developer tools and smooth access to APIs.  As we mentioned earlier, customer-centric banks like First Direct are out of the blocks. For those banks that are still putting on their running shoes they will also need to work from the customer back when evolving their open banking strategy. They’ll need to listen and analyse what customers want, need and expect. How does open banking add value?  Are there any gaps in the customer journey that need closing?  Failure to do so could mean customers switch to a customer-driven alternative.