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Recent days have seen two big shifts in the UK financial services industry towards greater participation, competition and innovation. New financial services firms are putting pressure on the Bank of England to grant them access to secure settlement accounts, and the UK government is backing the creation of an open banking standard. Together, these factors could herald the start of a significant change in the way that financial services are offered to consumers in this country.
Both of these proposed changes reflect the transformation that is taking place in the way people expect to interact with FIs. Fundamentally, consumers now want to see their financial services providers no differently to other service-orientated applications that they are familiar with. They want to be able to interact with financial services in a seamless way that suits them, and that has become routine with regard to other technology applications: on-demand, rapid and intelligent.
The industry has realised this, and challenger banks based squarely around customer service seek to capitalise on the trend, offering a slick, frictionless experience that reflects the way that consumers could interact with banks in an ideal world. Tandem Bank, which was recently granted a licence, is a good example of this – a bank that will offer primarily a digital only experience, based around the mobile, to fit in with the way that customers live their lives.
It is therefore great to see that major institutions are taking a shake-up of the industry seriously. If the Bank of England grants smaller FIs access to settlement accounts and the Faster Payments system, this will bring about a welcome decrease in the cost of operation and entry for businesses such as Tandem Bank. The net result of this can only be good for consumers, who can look forward to next-generation banking experiences and vastly increased choice.
An open banking standard will also serve to accelerate these changes. Open application program interfaces (APIs) will rapidly change the sector for the better, allowing for collaboration and competition to bring about new models and services. The data analysis made possible by open APIs has been proven to generate exciting new technologies, services and functionality in other industries and it is my firm belief that the financial services industry need be no different – with some caveats.
So, are we on the cusp of a major change in the UK financial industry? These two shifts have the potential to really change the UK banking landscape for the better, bringing more choice, innovation and improved services. If financial institutions wish to fit in with the way consumers want to live their lives they should welcome these changes, and the disruption that they might bring.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Erica Andersen Marketing at smartR AI
04 November
Ellison Anne Williams CEO at Enveil
30 October
Klaas Stijnen Co-Founder & Co-CEO at Montoux
Vinothkumar Kolluru Senior Data Scientist at Fractal Analytics
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