PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Leveling the Playing Field With Open Banking

Joseph Walent by Joseph Walent
October 16, 2017
in Analysts Coverage
0
Data Protection California Credit Card Issuers, banking data

Data Protection in California: Credit Card Issuers Take Note

1
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The U.K. and the EU may be providing U.S. financial institutions a glimpse into the future and how best to negotiate an increasingly customer-oriented landscape and individually directed personal banking experience. The coming deadline in January to open access to transactional data at each consumer’s behest removes the barriers to the “business preserve” FIs had enjoyed for so long. Further, the prospect of automating many of the aspects of banking and payments allows consumers to maximize savings in terms of rates, fees and optimize product and service engagement.

“The great thing about opening up data via APIs,” Blomfield says, “is that you can just automate away so many of life’s annoyances. You can use software to start optimising your life: auto-switching your gas or electricity or making sure you’re always on the best insurance policy.”

This kind of automation is how Open Banking Limited hopes to eliminate one of the great unfairnesses of the existing banking system: charges for exceeding your overdraft limit. Over half (51 per cent) of overdraft users find themselves paying a myriad of expensive daily, monthly and transaction fees, according to the CMA, usually when they are struggling financially. (To give one indication: if you go over your overdraft, you get charged £10 to £25 for every transaction, whether or not it actually goes through.) The Financial Conduct Authority said recently the system gave it “significant concerns”.

Open Banking makes it possible to create automatic systems that monitor your account and step in when you go into debt. If it can’t move money from another account, it will take out just the right amount of credit from the lender with the lowest rate of interest, without fees, and without even needing to ask for permission. “We expect that to become automated,” says Miles Cheetham, head of customer engagement at Open Banking Limited.

For banks, this is a problem. Overdraft fees – often from apparently free accounts: a classic case of, if you’re not paying for it, you are the product – provide around a third of bank revenues, according to the CMA. But the larger danger is that, like other incumbents before them, banks find themselves sidelined by digital platforms. “Look at what happened 10-15 years ago to Vodafone,” says Barnes. “They owned the network, the portal and the content. Then the App Store came in and that became where people went. The huge threat for banks is that they become plumbing for the financial sector, rather than having a direct relationship with the consumer.”

Mercator Advisory Group anticipates the transformation many financial institutions have underway, seeking to better engage and partner with their customer will serve to insulate them against the propensity to wider “utility-ization” of retail banking. While the U.S. has taken a more market drive approach to improve customer expectations of service rather than regulation, the effect is likely to be similar in outcome: wider customer choice in approach and engagement and ease of transferability to secure desired service levels. Giving consumers a sense of financial advocacy will be critical to build and retain trust.

Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group

Read the full story here

Tags: Open Banking
1
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    Why Businesses Need to Adopt Real-Time Payments as a Competitive Differentiator

    Why Businesses Need to Adopt Real-Time Payments as a Competitive Differentiator

    January 27, 2023
    faster payments

    Faster Payments Are Set to Revolutionize Modern Digital Payments

    January 26, 2023
    How AI can Help Manage Payments Risk in 2023

    How AI can Help Manage Payments Risk in 2023

    January 25, 2023
    cross-border payments

    How to Implement Effective and Innovative Cross-Border Payment Strategies

    January 24, 2023
    credit card experiences, digital payments, b2b payments

    Will Consumer-to-Business Payment Trends Drive B2B Global Growth in 2023?

    January 23, 2023
    Faster Payments Faster Identity Verification, connected car, payments

    2023 Predictions: Authentication, Digital Identity, and In-Car Payments

    January 20, 2023
    bank data

    Interconnectivity, Data Sharing, and Security Are Vital for Banks to Thrive

    January 19, 2023
    B2B Payments, cryptocurrency

    Crypto as a Practical Solution to B2B Payments

    January 18, 2023

    • Advertise With Us
    • About Us
    • Terms of Use
    • Privacy Policy
    • Subscribe
    ADVERTISEMENT
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • News
    • Resources

    © 2022 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download the Brighterion eBook - The power of today’s market-ready AI to reduce transaction fraud