Last September, the European Union’s regulatory requirement for banks to open up their payment accounts via application programming interfaces (APIs) came into effect. Since then, open banking has taken centre stage within European retail banking and payments. In this blog, Elina Mattila, Executive Director at Mobey Forum, shares insight into how emerging consumer attitudes may impact open banking services in the coming months.
It has been over six months since the revised Payment Services Directive (PSD2) came into full effect and with it, required banks to allow third party providers to access payment initiation and account information. While the regulation was designed to facilitate open banking, the market demand was uncertain. Would we, as consumers, choose to embrace the new services enabled by open banking? And if so, under which conditions?
To understand consumer attitudes, Mobey Forum and Aite Group partnered on a pan-European study to determine the appetite for open banking services amongst 1000 consumers in Finland, France, Germany, Spain, and the United Kingdom. The study, launched in November 2019, revealed many important consumer trends and attitudes, including key priorities and potential barriers for adoption.
Consumer appetite for change
The consumer benefits of open banking are largely perceived to be compelling, yet this counts for little if the providers of those services are not deemed trustworthy. This is an observation reflected in the study, which highlighted consumer confidence in service providers as critical to open banking adoption. People want clear visibility of who is managing their finances, and the overwhelming majority (88%) would prefer their primary source of open banking services to be their main bank, as opposed to other banks or third-party providers (TPPs).
Consumers also indicated high levels of trust in their current bank of choice, reflected by 77% preferring to use a financial product comparison service offered by their main bank. By enabling customers to compare the pricing and conditions of a range of financial products on the market, they feel more comfortable that banks have their best interests at heart. This is a welcome trend, and one which should be celebrated in the aftermath of the 2008 financial crisis. For the banking industry to have rebuilt trust levels in this way bodes well for consumer adoption of future innovations.
With a trusted provider, one third of consumers were then either ‘very interested’ or ‘extremely interested’ in integrating open banking services into their financial routine. This applied to specific use cases: account information services (32%), pay by bank (33%), purchase financing (25%), product comparison (35%) and identity check services (35%). Unsurprisingly, consumer willingness to adopt these services relies heavily on providers continuing to prove that they can be trustworthy stewards of personal data.
For those unwilling to adopt open banking, concerns largely focused on reservations around security and privacy. As open banking becomes more sophisticated, it will be interesting to analyse the nuances around how consumers engage with third parties. Established brands are perhaps more likely to be trusted by consumers than lesser-known online retailers. For this reason, consumers may hesitate to engage newer companies than brands they are already familiar with. In an industry as varied as finance, this creates additional intrigue in the ongoing battle for market share between the newer ‘challenger’ banks and the older, more established European banks.
Consumers might, however, be willing to deprioritise trust and, instead, favour convenience and usability. When questioned over their willingness to adopt a new payment method, for example, 91% of respondents indicated that they could be tempted to switch either by financial incentives or the promise of greater convenience.
The path forward
While open banking is still in the relatively early stages of development, it has made significant progress in a very short period of time. Not only is it allowing consumers to share financial data with authorised providers as they wish, but it is set to spark more competition and innovation within the market.
From a business perspective, open banking is expected to create lucrative new revenue streams, particularly for companies which are able to innovate quickly and react to consumer demand. It is prompting consumers to reconsider how they manage their finances and – most excitingly – it’s not even close to reaching its full potential. It should bring a whole new era of service partnerships between banks and TPPs, which will enable a new generation of innovative financial services.
For the industry to truly fulfil its potential, it is vital that stakeholders are able to explore new business models, innovations and changing customer expectations for open banking in a commercially neutral environment. Mobey Forum’s open banking expert group provides exactly this, and we look forward to supporting our members as they shape the future of digital financial services.
Where to find out more
The opportunity for open banking is explored in more detail in a report by Mobey Forum and Aite Group, entitled Open Banking: Open Minds? Consumer Appetites for New Banking Services. It provides banks and other financial services stakeholders with a market view on consumer appetites toward new open banking services and explores the possible roadblocks to consumer adoption. It is also discussed in a podcast featuring key representatives from Interac, Erste Group Bank and Strands Finance.
WHY BANKS NEED TO EMBRACE WELLBEING IN THE DIGITAL EXPERIENCE
Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero
The impact of the COVID-19 crisis on the economy has been huge. Over the past six months, youth unemployment figures have dropped, wages have stagnated and GDP has fallen by a record 20.4%. The drop in GDP is worse than the 2008 Financial Crisis, the Winter of Discontent and the Great Depression.
While the furlough scheme and other government measures have provided some much-needed financial support, the prevailing social and economic conditions have made money worries increasingly common. According to a recent survey from MullenLowe Profero, during the pandemic 40% of 18-25-year-olds are afraid to look at their bank account, with a further 40% stating that thinking about their money has a negative impact on their own personal wellbeing.
In response to these rising financial concerns from account holders, it is clear that banks need to help people – especially young people – feel more confident in managing their money. In particular, banks need to provide more educational support to their customers about how they can make the right financial decisions. This means designing tools and support services to enable more people to effectively manage their finances.
With 60% of consumers aged 18-25 believing that banks should help them have the capacity to absorb a financial shock, financial institutions also need to adapt their products and services to meet the needs of more uncertain account holders.
Adapting services, however, is easier said than done. The pandemic has radically shaped consumer behaviours and therefore the old rules no longer apply. For example, while consumers in the past may have preferred to discuss financial matters in person at a bank branch, risk of infection and the widespread use of digital tools has meant that the majority of young people want banks to provide wellbeing services online.
Digital experiences are also important to the future success of any bank. According to MullenLowe Profero’s report, digital experience is now the number one reason why young people choose a bank. Therefore, it is clear that banks during the pandemic and beyond need to reevaluate their operations and shape their personal wellbeing strategies around digital tools.
Community and Global Wellbeing
MullenLowe Profero’s report into financial wellbeing found that young people weren’t just concerned with their own personal wellbeing. They were also concerned about the importance of community and global wellbeing too. In fact, over half of 18-25-year-olds agree that the events of the last few months have made them seek out brands that do better for the world, with another 50% stating that the importance of a local community has increased during the pandemic.
Community wellbeing is concerned with the importance of local areas and the businesses and organisations that are based within them, whereas global wellbeing is concerned about the entire world. For banks, showing support for areas local to their branches and customers as well as issues affecting the globe such as the climate crisis is important to maintaining the trust and support of account holders.
Focussing banks on concerns around community and global wellbeing requires banks to assess their impact on the wider world. In other words, it forces banks to check who they support and where their money could be better placed. For example, young people want to be recognised for their positive behaviours. 56% of 18-25-year-olds want rewards and benefits for purchasing ethical and sustainable products and services.
The findings of the report found that young people across the board want financial institutions to reflect their values and to help them manage their finances. With COVID-19 continuing to wreak havoc on our day to day lives, banks can provide much-needed support by offering educational help as well as creating products and services that actively manage an account holder’s finances. They can also step in and provide support to the wider community and world by taking measures to reward ethical and sustainable behaviours.
IMPROVING THE BANKING EXPERIENCE THROUGH INFORMATIVE AND ENGAGING VISUAL COMMUNICATIONS
Javier Lopez, General Manager Vertical Solutions, OKI Europe Ltd
Banks play an integral role in daily life. However, everyday opportunities such as attracting new customers into branches to open an account, or promoting new offers and services to existing customers, can be lengthy, expensive and cumbersome processes – especially when tailoring communications to the specific requirements of each branch, or differing customer needs.
Quickly creating and adapting in-branch visual communications to communicate and educate cost effectively while remaining on brand can be a challenge, especially for banks that have networks of branches and print their visual communications centrally or use third-party suppliers.
Building trust through signage
Visual communications can help build trust and satisfaction between you and your customers. The ability to create and print personalised communications on demand can not only instil confidence in your brand, it can also offer the flexibility to quickly adapt to financial trends and fluctuations in interest rates. This is particularly important in today’s volatile market, so that you can keep your customers informed while remaining competitive.
Printing in-branch and on-demand is an immediate and cost-effective way for banks to communicate with customers. With the right printer on-site, branch staff can easily create and print signage and customer communications as well as everyday documentation to a professional quality as and when needed. This saves on the cost of third-party suppliers and eliminates lead times for essential signage.
The ability to print a comprehensive range of collaterals in-house including freestanding and hanging banners, posters, self-adhesive floor and window stickers, as well as personalised leaflets and direct mailers, can help keep customers informed about the latest services and offers. It can also be used to remind both customers and staff to adhere to social distancing guidelines. Furthermore, the same printer can be used for day-to-day documents such as personalised mortgage or loan offers.
A message that sticks
As the world adjusts to a new normality, OKI Europe Ltd recognises the challenges banks face when encouraging social distancing and has teamed up with Floralabels to offer free* social distancing media and artwork to create self-adhesive floor stickers that can be printed quickly and easily from an A3 colour printer such as the C800 Series. Floor stickers can help ensure customers maintain safe distances while queuing at counters, kiosks and ATMs. The free stickers include self-adhesive floor circles (285 x 285mm) and rectangular floor banners in two sizes (215 x 900mm and 297 x 1,320 mm) with various designs and messaging options to choose from.
Achieving ROI with a do-it-all device
When it comes to printing in-branch, implementing a printer with unrivalled media flexibility will provide the best return-on-investment. Not only will the bank be saving on printing and delivery time and costs, it will also save on storage space or potential wastage as well as offering the flexibility to be more reactive to market trends in a timely manner.
OKI’s multi award-winning C800 Series A3 colour printer is designed to take up a minimal footprint and will supply everything from 1.3m metre hanging and freestanding banners to posters, self-adhesive floor stickers, window stickers, leaflets, flyers and much more on a diverse range of materials. Featuring OKI’s pioneering digital LED technology, the C800 Series delivers professional quality results, at high speed and on-demand.
Banks are vital to helping people and businesses prosper, supporting economic growth. Investing in cost-effective do-it-all devices that enable the fast rollout of eye-catching, professional quality collateral will help banks and their customers thrive.
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