New banking tribes as a result of Open Banking have arrived

Open Banking has fundamentally changed the game for all of us in the banking and financial services sector. With shifts involving customer data, naturally there have been concerns as organisations transform, from how they can get a sufficient return, to the need for security, to the need to adhere to the new regulations. However, Open Banking has been a positive force, providing improved service, especially regarding information, for customers and greater potential for revenue for service providers.

While there are sets of rules in place governing financial institutions, banks and financial organisations have had the ability to choose which ‘banking tribes’ they want to be a part of.

Tribe 1 – Cautious followers

Some banks have made the decision to do the minimum – and that’s okay. Far better to walk before you can run than tripping up trying to get ahead too fast. There are difficulties with change and data due to their core systems and technologies being old and cumbersome. Financial groups in this tribe have followed CMA guidelines, ensured they share payment data and allowed their customers to share their own payment data with third parties. Some of these financial service providers have established partnerships or invested in challenger start-up brands too.

Tribe 2 – Customer pleasers

Other banks have taken it one step further, allowing customers to link multiple bank accounts under one app, such as Barclays, Lloyds and HSBC, making it easier for customers to keep track of all their spending in one place and keep tabs on their savings to drive loyalty and retention.

Tribe 3 – Technology mavens

Financial organisations in this tribe have launched digital banking brands, such as RBS which has soft-launched Bó, or offered new banking services such as automatic receipt capture and invoice billing or partnered with third parties to start offering new financial products and services they don’t already offer. Some have looked at white label banking products or are offering banking as a platform services, such as BBVA in Spain. BBVA has created a new revenue stream enabling third parties to launch anything from a current account to an app with multiple products using its cloud-based platform.

Tribe 4 – Non-banking newbies

Those in tribe 4 have begun putting non-banking services on the table, using third parties to offer customers better deals and enable ease of switching service, such as for energy. We could soon see banks doing the same for TV, broadband packages and other services. Data is readily available through current accounts or credit cards, and sometimes all it takes is emailing a bill and then clicking a new offer. No paperwork and savings generated for the customer.

But what does it mean for the wider industry? Well, it’s true to say Open Banking is introducing change to the financial sector but customer demands are also increasing the level of competition. This is only going to get fiercer. No matter which tribe an organisation is part of, the same message applies for all of them. To succeed in the new era of Open Banking, it is vital to have a clear strategy, figure out their goals for achieving that and make sure they have the right team, technology and any third-party support in place to make it happen.