Three things we expect Open Banking to deliver this year
With four-and-a-half million regular users and a 60% increase in new customers over the last 12 months1, Open Banking continues to progressively build momentum in the UK. And there’s no denying that it is changing the way people use and experience financial services in the modern world. But what developments we can expect to see in 2022?
Millennials steering the way forward
Millennials tend to be at the forefront of any digital movement. In fact, nearly three in four millennials claim they are very confident using technology to manage money versus just over half of non-millennials2. This means that this group – the digital natives – are more likely to believe that tech and data sharing are empowering, as opposed to dangerous.
In fact, a survey by Altus revealed that more than half of 25-34 year-olds (54%) who are comfortable using an online service are also happy to share information on all of – or a combination of – their savings, investments, pensions, other assets and their debts. This is compared with 49% of 35-44 year olds, 44% of 45-54 year olds and just 35% of over 55s3. “Because younger people are more willing to share data,” says Abhishek Sinha, EY Canada Open Banking Leader, “financial institutions can leverage this insight to uncover new ways of innovating and personalising customer experiences, while potentially developing new business models4.”
Customers increasingly expect personalised experiences. And as our lives transition from physical to digital, an enormous amount of data about all of us exists. And this data can be used for good, such as to offer more bespoke products suited to people’s individual needs. “Historically, we try to fit people into financial product boxes rather than trying to fit financial products into people boxes,” says Daniel Globerson, Head of Open Banking, NatWest Group. “We can expect to see this approach turned on its head very soon.”
The transition to Open Finance
“Open Finance is the next logical step beyond Open Banking,” says Globerson. “It’s expanding the surface beyond the likes of current and payment accounts and moving into lending products, through to investments, mortgages, pensions and insurance.
“It stretches beyond transaction accounts into the broader ecosystem of financial services,” says James Dickerson, Client Partner, Motive Partners. “This means insurance products, claims data, wealth management data. When combined with Open Banking, Open Finance has real potential to deliver customer value.”