Open Banking and the Value Exchange

This week, we will begin to experience a new way of accessing goods and services as Open Banking starts to take effect – and some of the largest banks in the UK are gearing up to present these new benefits to their customers.  The emergence of Open Bank APIs into the UK is a landmark event. For customers, for us as individuals, it will provide better direct access to our data. In theory, enabling us to use it to get better products, better services and save time.

Open Banking is designed to give consumers more freedom to choose the products and services that work for them. The highest quality decisions are made on affordability when there is sufficient data available. If we can build towards a scenario whereby individuals are willing to share more data, in order to drive the type of decisions they want, giving them access to financial products and services that are right for them, faster and more efficiently, then that can only be a good thing.

But if we don’t explain how this process works, clearly and concisely, demonstrating a genuine value exchange, then we will miss the opportunity. Helping customers understand and take advantage of these new and differentiated services will be a major undertaking. It will require some real public education, so that people can make sense of the new ways of using their financial information – and what they’ll get out of it.

The quality, management and understanding of that data is vital. It allows businesses to develop better products and services, and it is also the key to building better, more meaningful relationships with their customers.

To build those relationships, we must recognise that the information belongs first and foremost to the consumer. It is their data. We are its custodians, and we must act accordingly, to make sure that people understand and are comfortable with our sight and use of that data.

We must be able to build trust, while meeting all the associated obligations that come with the responsibility of managing huge volumes of personal information in a complex digital world – prioritising security and transferring that data both safely and efficiently.

Some recent Experian research revealed some interesting insights about people’s attitudes to data, offering us a better understanding about how people in Britain feel about the way their data is kept and used today. The study uncovered four distinct types of people, in terms of their attitudes to data sharing:

The Unaware make up 22% of the population, and simply don’t know the ways that organisations wish to use their data. They are often excited to access the product or service they desire and they click ‘accept’ without truly engaging with the full meaning of what they are agreeing to.

The Accepting (41%) will share data, but they are not thrilled with the amount of data they are asked to share to access the products and services they want.

At 28%, the Cautious are much more careful about how they approach the data exchange. Before they share any information, they want to make sure that the company asking for their data is legitimate and trustworthy, and ensure that they fully understand the agreement that they are entering in to.

Finally, the Incognito (9% of the population): A smaller and wary group which has adapted to their environment by figuring out how to navigate data sharing without revealing much information that they don’t want to. They have developed defence mechanisms to prevent them receiving the unwanted ‘hassle’ or intrusion that they perceive to be part of the process of sharing their data.

In general, most businesses feel that if they can utilise personal information they can deliver a better, more personalised customer experience. Why? Because that’s what data delivers. The ability to have tailor-made connections with your customers based on real insights. But this exchange and the value it delivers to the customer isn’t always obvious.

Businesses need to know how to read and respond to all types of customers, so that both parties understand and trust each other enough to derive a decent level of value from the new opportunities Open Banking creates. 

A whole new journey starts here. Data can drive innovation and make hugely positive changes to the way the world works, but we need to start building more awareness and confidence about how it is used.