27 April 2018

IB Times: The revolution in banking that will be good news for the customer

The second Payment Services Directive is set to change the future of the banking sector. Traditional banks need to focus on their back-office IT systems but they must also dedicate time to creating a personalised approach that offers great, bespoke value to all customers, writes Pini Yakuel.

The story so far has been that banks and financial services providers have had the upper hand, relying on large established customer bases built over the years. However, under the Open Banking Initiative, banks are required to share customer data with regulated third-parties.

It's time to flip the story on its head: Rather than a threat, The game is not over, it has only just begun.

For customers, Open Banking means more choice, transparency, and better service. Recent data shows that one in two UK consumers would be happy to share transaction data with third parties if offered a more personalised service, while one in three would be happy to use banking services from technology companies, because of the personalisation they offer.

Banks and financial services providers will have to focus on providing the best possible value to customers or else risk losing them to competitors. The more agile organisations will be looking at their existing data to find out what value means to each person, and adapting marketing strategies in an emotionally-intelligent way to make every customer feel special.

New players will be looking to poach customers by offering them better deals and ultra-personalised service and so traditional providers will have to prove that they are making efficient use of the wealth of customer data they already hold, by communicating in an increasingly personalised way.

Ultimately the goal of both fintech and financial institutions should be to deliver a personalised digital experience that helps their customers improve their day-to-day financial decisions, providing them with the ultimate reason to remain loyal to a certain brand, and not choose the competition.

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