Today’s bank-to-consumer relationship is not what it used to be, and the way we bank has become more fragmented. It’s common for us to change banks or use multiple different providers for mortgages, loans and so on. This is typically because there is a sense of distrust towards the financial sector, and the days of consumers using one bank for absolutely everything have long gone.
Mark Hinds, CEO, Polymatica
But there may be an opportunity to win this loyalty back. Open banking offers a chance to build back trust by giving customers value from banks that truly understand them. The problem is, many organisations don’t know how to use data to its full extent. Until banks learn the value of their data, they risk missing this chance to turn back the tide and regain consumer trust.
A Swing and a Miss: The Current State of Open Banking
Open banking regulations enforce a customer-first, trust-centric approach to banking. Users have a significant amount of control over personal data, which lets them opt in and out of data sharing, control which apps access their data and claim refunds when impacted by fraud. Any organisations using open banking must be registered with the FCA and adhere to strict regulations regarding the use of consumer data and the security of their platforms.
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These regulations could enable banks to provide value to consumers whilst simultaneously reassuring them their data is being respected. But this mark seems to have been missed in the public consciousness; 58 percent of people don’t know what open banking is and 77 percent say they would be unlikely to use it. It’s clear that our mistrust of banks runs deep and the value open banking could bring to consumers has not yet outweighed scepticism. So what’s holding everything up?
Teething Problems or are Banks Missing the Point?
One key problem is that many organisations simply aren’t equipped to utilise large data sets, or to translate them into consumer benefits. Mistakes like having scattered, poor quality data that is too difficult to understand mean that organisations often struggle to access data to generate vital insights. Aggravating the problem further is the current lack of skilled data analysts. Too much data is being handed over to too few, and this has created a bottleneck of activity – slowing data analysis to a crawl. The result of all this is that, instead of targeting customers with specific benefits, banks end up spamming their entire base with the same offers. Far from building trust, this risks irritating customers and pushing them away.
See also: Meet the ‘Conductor’ of the Open Banking Orchestra
Open banking means that people will soon expect banks to go beyond just holding money and instead have a broad portfolio of services. But for banks to be able to keep up with this expectation they must understand their consumers’ needs in real-time and provide value based upon this understanding. Banks are at a crossroads, and the need for technology to help companies make sense of data is going to be vital in dictating where they go next.
Real-Time Data: When Opportunity Comes Knocking
This is where real-time technology can step in and revolutionise banks’ approach to data. Banks who are slow to respond to evolving needs risk trapping customers in an unfair exchange of giving up their data with no value in return. By speeding up the process of data analysis banks could respond to consumer needs as and when they arise, something that will be vital in winning back trust and satisfaction. Embracing real-time technology could mean restoring this bank-to-consumer exchange back into one of trust.
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But enabling real-time analytics is challenging for organisations because many of them are limited by CPU processing. This prevents organisations from facing the avalanche of data that needs to be sliced, diced and analysed in real-time, with billions of records needing to be operated on in seconds. Traditional analytics running on the CPU can’t deliver this. Instead, companies need to adopt GPU-based solutions that can run queries on huge and varied datasets without the constraints of the CPU. With the speed provided, huge volumes of data can be explored instantaneously, future proofing the data analysis capabilities needed to crunch information provided by open banking.
Another key to building trust is making data more accessible. Simplifying data analysis will enable banks to entrust more employees, not just highly trained analysts, to read data. This means that employees who understand the business context of their queries will be able to use this knowledge to rapidly gain insights from data. These citizen data scientists can make decisions based upon a deeper, all-encompassing understanding of both their organisations and customers. When real-time data technology and citizen data scientists work in tandem, banks will be able to cultivate real value for consumers.
Revolutionary Road: Technology is the Route to Trust
If banks embrace open banking to its full, the potential to rebuild trust and loyalty is huge. By providing customers with value at the right time, banks could repair the relationship and begin to regain trust. However, for this opportunity to not be missed, banks must be able to utilise their data to its full extent. Technology that enables data to be analysed quickly and by all could revolutionise open banking. The change will not be immediate and should be implemented as a slow transition. But it is critical that the industry evolves and that banks begin to take steps to introducing technology that will support open banking in reaching its full potential.
