Large, established, trusted brands, rich with data and with millions of loyal customers, are perfectly placed to use Open Finance technology to create more engaging and impactful customer experiences.
Open Finance allows them to create hyper-personalised products and services, delivering a more holistic and supportive customer relationship and extending the customer lifetime value.
Five key aspects of the revolution underscore the transformational power of the Open Finance movement for financial and non-financial services business alike:
1. Barriers to entry
The financial services sector was previously guarded by prohibitive barriers to entry - closed systems; legal and regulatory boundaries; high fixed costs and capital requirements - but Open Finance provides a simple, cost-effective way for new entrants to comply.
The ‘Amazonification’ of financial services means that operators from outside the sector now have the opportunity, through using platforms such as Moneyhub, to develop innovative propositions based on rich consent-driven data. They can use the sectors’ resources, without the capital and regulatory burden of becoming a direct participant in the regulated financial services markets - just as Amazon Web Services has enabled the explosion of SaaS businesses over the last decade.
“The ‘Amazonification’ of financial services means that operators from outside the sector now have the opportunity, through using platforms such as Moneyhub, to develop innovative propositions based on rich consent-driven data.”
2. Data aggregation and account-to-account payments
Open Finance not only significantly reduces the cost of entering the market, it also offers a whole new world of innovation and engagement ready to be explored. Previously siloed aspects of financial services data, such as mortgages, consumer credit, investments, loans, savings, and pensions can now be seamlessly connected by authorised third parties.
With access to data and the ability to make account-to-account payments, through third party providers (TPPs) like Moneyhub, any business - Financial Services or otherwise - can now offer a range of financial products with little capital investment or regulatory burden.
“Any business - Financial Services or otherwise - can now offer a range of financial products with little capital investment or regulatory burden.”
3. Personalisation with consent
Customers are able to opt-in to receive hyper-personalised insights aimed at helping them realise a ‘better self’ in financial management but also in more personal and fulfilling retail experiences. Having complete oversight of their own financial situation is a key tool for establishing better financial and mental wellbeing, and also enables consumers to build greater resilience to financial shocks.
Moneyhub offers this greater visibility, which promotes better financial decision making and smooths the process of switching between financial (and other) providers to deliver better value as well as encouraging competition among providers.
4. Reimagining engagement
Leading businesses will often have touchpoints with millions of customers. But they typically suffer from either low-levels of engagement or have high levels of engagement, but only in a very limited arena.
Open Finance enables customer engagement approaches to be reimagined, combining their huge resources with selective consent-driven financial data. Tapping into this comprehensive suite of functionality creates a genuine transformation in customer engagement for enterprises.
This front-line access to their customers’ daily financial lives also enables companies, through using a platform such as Moneyhub, to establish themselves as a comprehensive provider of a full suite of financial services. Importantly, this can be without the typical regulatory burden of operating in that sphere.
5. The payments opportunity
Open Finance also enables businesses to take hold of the payment relationship with their customers. Such a move not only strengthens engagement, but it also puts a significant revenue stream on the table while it reduces costs for merchants.
According to the British Retail Consortium’s 2019 Payments Survey, UK retailers spent £1.3billion to accept customer payments via debit and credit cards, as well as payment providers such as PayPal.
Financial service providers have taken this revenue for granted and with the Payment Initiation element of Open Banking, businesses can use Moneyhub to capture a slice of this market as well by offering account-to-account payments as an alternative to card payments. Offering one single-access point to connect and initiate payments across accounts can help reduce the overall payment processing cost to merchants.
The need for financial services businesses to be vertically integrated and control their supply and distribution channels is being eroded before our very eyes. Global technology businesses, retailers and telecoms companies, as well as the big asset managers and pension providers are now able to challenge banks head-on and compete for the lucrative rewards which are available in the financial services sector.
“Global technology businesses, retailers and telecoms companies, as well as the big asset managers and pension providers are now able to challenge banks head-on and compete for the lucrative rewards which are available in the financial services sector.”
As Angela Strange, general partner at Andreessen Horowitz, predicts “nearly every company will derive a significant portion of its revenue from financial services” and in the not-too-distant future too.
Open Finance brings that within reach and the likes of Akoni, Aon, Lumio, Mercer, Roqqett, OpenMoney, LEBC and Nationwide are already living in the future, thanks to Moneyhub’s Open Finance platform.