Guest by Michelle Monck, Xerox Industry Capability Leader, Financial Services. @mmonck
The Payment Service Directive 2 (PSD2) (“Open Banking” in the UK) was the European Banking Authority’s answer to creating a more competitive banking market. It came into force in local legislation across Europe in January 2018. European countries now have until March 2019 to be ready with open APIs. Banks in the U.K. had been pushed to be live for open banking even quicker than their European counterparts.
(Like many industries, Financial Services loves its acronyms, but this particular directive has more than most. This blog from Starling Bank provides an excellent “plain English” overview of PSD2 and open banking.)
Is Banking Ready to Change?
In the UK, there are now open APIs in place for a significant proportion of the banking market, yet the open banking revolution and increased competition haven’t shown signs of starting.
In my last blog, “Bank CMOs: Five Things to Know About Modernizing Your Marketing Model,” I wrote about the lack of significant progress in building trust with financial customers. The result has been customer apathy and a market that sees larger players not having to compete very hard for consumers’ business. Customers suffer by potentially paying more than they should and missing new services.
So are the changes hype? Are we close to the time when banks re-define and re-focus customer experience from tracking NPS scores, to a more strategic, competitive priority? Let’s look at what’s going on in this space.
Concerns about Third Party Financial Apps
Many bank customers check their banking apps or log into their accounts on a weekly if not daily basis. Banks that don’t keep up with that behavior risk losing customers’ attention and missing opportunities to build stickier relationships.
One threat to banks in this area is the introduction of account information service providers. These let consumers consolidate all their financial relationships into one view as a money management app. In addition, they can analyze customer data and transaction history to identify and match consumers to the best deals from other financial providers. Examples of this include Moneyhub in the UK and Mint in the US.
There are drawbacks to these apps. One concern is sharing sensitive financial data with a third party brand that customers don’t really know. This is where banks can and should capitalize on their relationships, because research has shown that when it comes to data security, consumers trust traditional banks ahead of other organizations.
Banking Customers Get Engaged with Apps
Some larger banks have entered the arena by creating their own money management apps. In the UK, HSBC has made a strong early move by introducing its Connected Money app. ING launched Yolt in the UK and now plans to expand this to France and Italy. Nordea has proactively worked with selected third parties to enhance and speed up their own product development process.
A great money management app needs to be a consistently great customer journey, including touch points like onboarding, handling inquiries, making account changes and adding new products. Loyalty will eventually come down to price and customer experience, so it makes sense to focus on the latter. Price has limits on what you can realistically do, but customer service shouldn’t.
How Customer Experience Can Keep Up
How prepared is your organization to deal with changing customer service touch points? Xerox can help reduce cost, time to market, compliance risk and the complexity of managing communications across creation, capture and distribution. We incrementally consolidate customer communications into the Xerox Communication Services Platform for a smooth transition. Our market-leading hardware, software and human capabilities help banks and other organizations create efficient communications-operating models at global scale.
Content and communications management are the key. Outsourcing communications services can improve customer touch points and communications. What do you need to do to take your customer communications strategy to the next level? We offer some ideas in this ebook, “The Three Cs of Customer Engagement.” It explains how to build better relationships through enhanced communications and back-office harmony.