Three tips for becoming an open banking brand genie
Historically, bank brands could count on loyal customers to support multiple product lines and revenue streams, from deposit accounts to mortgages, credit cards to retirement portfolios. But technology is exposing consumers to an ever-expanding menu of products and services across multiple channels, many of which offer more enticing user experiences than are available from their traditional banks. With fintech competitors threatening their market share from every direction, banks must adapt in order to protect not only their brands but their businesses.
Open banking enables legacy brands to tap into the innovation happening throughout the fintech ecosystem, putting virtually endless possibilities for products and services at the fingertips of the banks and their customers. Bank brands that adopt open banking technology can take on the role of the genie: the trusted entity that grants banking technology wishes via access to the vast offerings of the fintech frontier.
Amazon is the ultimate example of a “genie brand,” granting customer “wishes” in practically every retail category imaginable. By establishing a platform that aggregates and distributes such a wide variety of goods and services, Amazon has built a ubiquitous and highly valuable brand identity. If you ask an Amazon customer where a particular product came from, they’re much more likely to say, “I got it from Amazon” than “I got it from [third-party reseller].” This is not a coincidence -- it’s the result of a deliberate and successful brand strategy.
At Finastra, we help financial institutions establish their “genie brand” through our platform-based approach. By putting the customer at the center of a business strategy, open banking helps fast-track innovation and encourage collaboration that quickly grants a customer’s wish by bringing products and services to market faster.
Here are a few tips to consider when planning to adopt an open banking strategy:
Go beyond your core offerings.
According to a January 2018 survey commissioned by Bankrate, which surveyed 1,156 U.S. adults (956 of whom were smartphone users), 63% of smartphone owners use at least one financial app. Many of these offerings aggregate information from users’ financial accounts across multiple institutions to provide a convenient overview of their money, illuminate spending trends and, in some cases, recommend relevant products and services. But most of these applications are created by third-party fintechs and not banks.
With open banking, banks need to own these aggregator models and reclaim market share from fintech challengers. By collecting customer payment information from other banks through their own apps, banks can gain invaluable data from their clients and, with that data, provide services and experiences that extend beyond their core offerings. This creates an opportunity to sell new products across various financial verticals, such as mortgages, loans and wealth management. The cross-selling of nonfinancial services offerings is a great opportunity to consider and a potential new route to top-line growth.
Prioritize your customer.
Whether you’re a local community bank, a national financial services brand or an emerging fintech player, catering to customer demands and expectations is critical to maintaining a strong brand. Don’t expect loyalty from the new generation of customers; brand and trust are no longer the best arguments to stay.
Providing consumers with an array of services that cater to their daily needs will help bank brands stand out in a crowded marketplace, as well as improve the quality of their offerings to attract and retain consumers. Moreover, a brand that not only recognizes customers’ needs but is willing to recommend other companies’ products and services in their customers’ best interests, will be more likely to gain valuable trust.
Create a stronger bond.
In today’s crowded, tech-driven banking marketplace, customers will inevitably shop around for the products and services that suit them best. But established banks have a built-in advantage: their existing customer relationships. Rather than putting all their eggs in the “loyalty” basket, banks should harness the power of personalization through the abundance of customer data they already have at their fingertips.
The more effectively banking brands can personally connect and cater to their customers’ needs, the more loyal those customers will be. Artificial intelligence and machine learning are the underpinning technologies to convert customer data into insights and actions. More data leads to better insights, better personalization and, finally, more customers. The flywheel of open banking starts to spin.
Overall, there is some good news for banks: Brand loyalty is not lost to those who are ready to manage both new and legacy technology while remaining agile in this long-term adoption. In an era where the younger generation is able to compare experiences across industries rather than siloed experiences, loyalty often comes from expectations that are now set by FANG (Facebook, Amazon, Netflix, Google) -- extensive online presence, 24/7 user interaction and a seamless experience. Through open banking, banks don’t have to journey far to become “genie brands” within financial services.
Original article appeared on Forbes.