In January 2018, a digital revolution introduced a new way for people to handle their money: Open Banking.
All of a sudden, at the touch of a button, people could view their household bills, control direct debts and track payments across all their bank accounts. Banks manage this by opening up their data via ‘open APIs’, meaning third parties can access customer data in a standard, secure way.
However, despite the initial buzz during the launch, public awareness has remained relatively low. According to a survey conducted by banking software developer Splendid Unlimited, only one in four people had heard of Open Banking in 2018 and one in five people who had heard of Open Banking said they knew what it actually was.
According to research conducted by PwC, over 64% of adults are expected to have signed up to Open Banking driven services by 2022. However, the research found that customers are slow to adopt due to concerns over companies they aren’t familiar with having access to their personal financial details.
Experts have determined that if Open Banking provides a return on investment, maintains trust and continues to respect the data of its users, then the mass adoption of budgeting apps and digital money assistants may happen sooner than we think.
Which begs the question:
How can asset managers use Open Banking to enhance their proposition?
The answer is by it being a catalyst to turbocharging the digital experience of investors.
For individuals who are using apps that utilise open banking, they’re experiencing something new, often compelling and almost always a better customer experience than ‘old world’ banking. It’s this eye-opening new world and momentum towards delivering a more integrated customer experience that needs to be grabbed with both hands by asset managers.
Fund management is traditionally a sector that has focussed on custodial services and the value delivered by fund management capability - value measured by investment returns. In an increasingly low-margin environment, asset managers need to think differently about the value chain and recognise the digital experience as being a key lever to investor retention and growth, either d2c or through intermediary channels.
Integrations and open APIs change the game. They allow fund houses to build different and more compelling offerings that drive value beyond the boundaries of simply investment returns.
Add on services such as interactive portfolio modelling and performance reporting all add to the proposition. Layer on this the opportunities that come with AI and we’ll soon see sector leaders emerge with value propositions that change the game entirely.