The UK Open Banking agenda includes changes to data regulation that mandates wider sharing of consumer data by banks. These changes to regulation disrupt the traditional ways banks engage with customer data to provide products and services, and spell change for the way in which financial services providers will compete in the market.
Rather than conceptualising these regulations as punitive, however, they present a golden opportunity for banks, FinTechs and incumbents. Improved access to customer data paves the way for the creation of products and services that help people make better, more relevant, and more informed financial decisions.
All this is good news for the customer. Regulatory change will encourage innovation, driving out new choice in financial services products, and allowing us to consume those products and services in new ways. Change is on the horizon in retail banking, and it is exciting.
It is an exciting time for banks too; they have been presented with a choice. New regulations mean that they could become stewards of data, supplying information to other actors willing to take advantage of opportunity. Or, they can choose to pull in additional data, and ensure they remain relevant by capitalising on profitable customer engagement.
Encouraging change and innovation is positive. Creating new financial products and services is welcome, along with giving consumers choice. During that process though, how do we ensure that the products and services being made are going to benefit the customer and empower them to make better financial choices?
Over the past 5 years, we have conducted research with hundreds-of-thousands of consumers to better understand what they need to make better financial choices. Our findings showed that people want to make better financial choices, but are either not confident enough or are ill-equipped to do so alone.
This means that what people need are innovative products and services that enable them to make better financial decisions. These products and services can bridge the gap for consumers who lack skills or confidence to make the best financial choices for their circumstances.
To effectively create such products and services, designs must be built on empathy and a rich understanding of the customer, found in customer research. By taking a customer insight-driven approach to innovation, banks can create products and services with relevance, meaning and significance in peoples’ lives.
Creating relevant and meaningful products, rather than becoming stewards of data, also creates a tangible opportunity for banks to redefine themselves within the new future of retail banking as having a relationship with their customers that moves beyond transactional.
For these reasons EY & EY-Seren have launched the EY Open Banking Innovation Centre. The Centre is a purpose-built space where we are working together with our clients and their customers to deliver transformational change that will help consumers make better financial choices.
Find out more about the EY Open Banking Innovation Centre here.