How Open Banking Will Enhance Customer Experience
The level of experience that today’s consumers expect from traditional banks and credit unions is through the roof. It is difficult for traditional banking institutions to meet these expectations, especially with outdated products and poorly designed applications with high friction levels. In fact, all of this only does one thing for the financial sector — it hinders growth.!
So, what do you think is the solution? Well, many people believe that open banking holds the key to enhancing the consumer experience today. In my opinion, open banking, also known as PSD2 (Second Payment Services Directive) would allow FinTech firms to leverage their experience and benefit on a scale that is equivalent to most legacy financial institutions. How; you would ask?
Let’s first begin by understanding what open banking is and then examine the kind of opportunities it provides to all the participants in the ecosystem.
What Is Open Banking?
Open banking is an initiative that allows banks to securely share customers’ financial data with third parties such as apps and fintech companies, of course with customer consent. This initiative was rolled out in 2017 to allow banks to share customer data with other banks and apps through open APIs or application programming interfaces upon customer consent.
How exactly can open banking help to enhance the customer experience today? That is the question I need to answer.
Using Open Banking To Enhance Customer Experience
Organizations need to use open banking as an opportunity to develop partnerships for new product extensions that take the customer experience to the next level. Let’s examine the several ways in which open banking can improve the experience of customers.
Open Banking Increases Data Transparency
With the help of open banking services, customers will not only be able to invest in various financial products, but they will also be able to manage their finances transparently and easily. The complete transparency of data in open banking can ultimately improve customer relations in banks and FinTech firms. Companies can learn about their customers and get access to personal information by partnering up with the banking sector. Third-party APIs help to develop apps that provide all kinds of financial services for the customers of the company transparently. Not only this but everything is done only after the customer’s consent, which means that the customer is at the head of the wheel from the get-go.
Open Banking Streamlines The Lending Process
Open banking greatly facilitates the loan application process for the customer. This initiative makes the whole process completely automated, allowing all the required information to be submitted to institutions quickly and efficiently. Not only this, but customers can also get a list of various loan offers that are available to them and ultimately choose the best deal possible.
Open Banking Makes The Process Of Accounting Easy
Manual accounting can take a huge chunk out of the customer’s time. This can be easily improved with open banking by allowing diverse systems to be integrated with each other. This facilitates easy updates for every transaction that the customer makes. The icing on the cake - everything in open banking is done in a cost-effective manner, proving to be beneficial for the customer in the long run.
Open banking also allows customers to reduce the complexity of managing multiple accounts on a regular basis. Further, this helps them track their expenses in a simple & easy manner. For instance, customers can use apps to easily determine how much money they have left after regular payment, such as bills and rent.
Wrapping Up
Open banking is truly shaping up the future of customer experience in 2021. Not only does it make the financial processes for customers simple and easy, but also allows financial institutions to build better customer relations, drive the revenue streams and increase customer satisfaction. All the participants in the ecosystem need to take advantage of this form of collaboration and grab all the various opportunities available to them through open banking. Both traditional and non-traditional firms need to play to their strengths and must be ready to collaborate and usher in an era of enhanced customer experience in 2021 and beyond. What are your thoughts? Do you see CX more enhanced due to this in 2022? Do let me know in the comments.
About Author:
Saumil Shah, the CSO at Rishabh Software, is a technocrat with a successful track record of helping clients solve complex business problems. Under his strategic presidency, Rishabh has established a prominent market presence across multiple domains like Healthcare, Retail, Manufacturing, FinTech & more. He is an alumnus of IIT-Kanpur & London Business School and has been on the advisory panel of industry-leading bodies like NASCOM and GESIA. When he’s not busy solving business technology challenges, he enjoys playing tennis or football.
