Open Banking. Some regions have one thing right but banks in general still have one thing very wrong

Last month I spoke at the Nordics NextGen conference in Stockholm. The topic was open banking and PSD2 with a truly great panel, moderator and a full house of intertactive 400+ attendees and my first Nordics visit with open banking experience under my belt.

There were two key learnings that I took away from my time there. 

1) Clients at the forefront - Communication

I was hugely surprised by one distinct but refreshing observation. Every bank, every fintech, moderators, presenters had one thing in common; open banking and PSD2 being customer centric!!!!! Why do I seem so shocked? Let’s take the U.K. as an example. I was head of data standards for the UK’s Open Banking Initiative and very proud of the work that the entire team has done to be the first region globally to truly implement an open banking initiative. OB in the Uk went live on March 13, 2017. Now, I bank with two of the top 9 banks and as a client I am still waiting for a truly clear communication on:

• What open banking is in a clear and simple way to understand?
• What it will mean to me the customer?
• What role will my bank play?
• What has my bank done to ensure that this is to my best interest?
• What are my options?
• What do I need to do, if anything?
• What does the FCA, treasury or any other entity like this say about this initiative?

In the Nordics, like in Australia, open API’s have been used for at least 3 years so that’s not news but what is news is that the Nordics and Auatralia have been very proactive of explaining and interacting with consumers on open banking from day one either by sending out communication, holding town halls or other forms of media but always ensuring that people were informed. I am in no way trying to take a shot at the U.K. but I would like to instead raise awareness of what open banking, followed by PSD2 and GDPR will mean to the client. While the UK banking and fintech world has a better understanding of what this all means (ok, this may be debatable) we are no closer in informing and convincing the mass, the real relevant party and reason why we embarked on this, the customer. 

2) The thought that the elephant in the room is not a threat. Really?

During the panel discussion, I stated what has in some way has been mentioned in various blogs and articles and that is the elephant in the room. The big tech/s everyone is saying will come and eat the banks dinner. While being proactive with the clients in the Nordics is super and not being proactive is straight up suicidal, my reasoning for supporting this train of thought is having been to SIBOS and other conferences in various regions this year it all seems to be about the banks and their API’s, fin techs and their solutions and everything else in between. Even in the Nordics banks do not recognize that because they have been around for a while or you hold accounts with them that the tech giants cannot be a real threat and become an oracle of payments processing. Wrong!!!!!

Let me explain. I would like to hold a survey between two distinct age groups, over 30’s and under 30’s with a couple of simple questions around their bank and around the techs they use. I would bet handsomely that the under 30’s would know far less or care even less about banking tradition and loyalty than of ease of use as a consumer through the various tech tools they use. The future customer is not the one that understands and values the history of the Wells Fargo story in western US, it’s the customer that can make purchases through the easiest possible route via the tech that they use. Loyalty in banking is like football players playing for their teams and not for the money, a thing of the past.

If banks don’t wake up to this reality they will be replaced as we know them today. A simple possible scenario is Apple announcing a banking arm offering a series of services if you hold a banking account with them that ties into their current services like Apple Pay and whatever else is to come. How many users today rely on PayPal more than going to their bank to make the same payment? So if a big tech provided account services and was already a trusted plater, we still believe a massive movement of accounts wont happen? If banks do not step up and together with fintechs become creative and appealing, the above is only a question of time. 

Your thoughts?