Fintech on Friday

How to harness the powers of Open Banking

How PSD2 and Open Banking will change our view and ease of wealth aggregation and how banks can use it to their advantage.

Open Banking and PSD2 are associated with several problems for banks: costs, loss of data, increased competition, and increasing regulatory burden. The implementation deadline is near and very little banks have a clear proposition on how to use it instead of just complying with PSD2. What if I told you, that you can use Open Banking to win new clients to start new business models? And that you can increase client satisfaction and your share of wallet?

How to make your clients love you

Here is a common view on Open banking: Financial institutions have to create an API, which they might not be very familiar with. They have to share data about their clients, which competitors could use to take business away. And last but not least the costs of complying with PSD2 are increasing. But here is a not-so-obvious view:  By offering the more compelling proposition you can leverage your existing client base, your brand and the trust clients have in you to understand your clients better. Moreover, you can offer them more value and increase your share of wallet with the client.

Open Banking does not have to stop at current accounts as PSD2 does. Imagine the possibilities: You not only can connect current accounts, yes, (yawn!), but also: portfolios, real estate, private equity, cryptocurrencies, cars (yes, all of those data points can be delivered to your clients at their fingertips). Aggregate wealth and analyze transactions to give the next best actions that fit perfectly to your clients’ needs.

Answer important questions for your clients:

•How much am I worth?

•How much can I save and how much do I need to save to reach my goals

•Does my asset allocation fit my needs?

As a bank you can get valuable information about your clients:

•Did I advise them correctly?

•How much is my client worth? Does that change the way I treat him/her

•What other offerings would this client profit from?

“If you connect valuables of your clients, you’ll be the financial center for all their needs”

 

How to be the center point of your client’s financials

Now, how can a bank achieve digital excellence and connect to new clients? The answer is easy. It should deliver apps and solutions that offer real value for their clients.

Here is a roadmap to excelling in your business:

1. Think of a clear business case and what you want to achieve, e.g.

•Find out more about your clients

•Increase client bonding

•Increase your net promoter score

•Get new assets

2. Think about how you want to achieve this

•Focus on current accounts and use them as an example of retirement planning

•Use holistic wealth aggregation to give better portfolio advice in the context of financial planning

•Use aggregation to better target promising clients in your sales funnel

•Increase your assets under advice by comparing your expertise with existing client portfolios

3. It helps to know where your proposition is better than the rest

• Do you have a strong investment office?

•Can you offer a wide range of products?

•Do you have an extra trust factor?

•Are your services cheaper, more diversified, better performing than others?

Such digital tools based on Open Banking can help you to show clients digitally and easily how they will profit from working with you. And all that in an automated and scalable manner.

 

 

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