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Open Banking: Customer intelligence for financial services

Customer intelligence has become one of the forces disrupting the competitive landscape of financial services.

In the midst of change and transformation driven by the PSD2 legislation, the financial services industry is discovering the true potential of Open Banking. With the ability to connect directly to consumers’ banks, as a secure way to access financial information, one of the clear advantages that the innovative technology poses for those embracing it is customer intelligence.

Customer intelligence consists of collecting data from consumers and utilising the insights to find the best possible ways to serve them. No matter what industry your business operates in, consumer data is key for companies to understand the needs of their audience, and to get a solid grip for developing strategies that can truly respond to their customers’ needs.

In the financial services sector, harnessing consumer data with accuracy is becoming essential in order for companies to deliver products and services that are personalised. A study by PWC analysing financial services technology and their impact, concluded:

“Customer Intelligence will be the most important predictor of revenue growth and profitability”.

Technology has for years been used to improve efficiency and to optimise costs – but the benefits are going beyond that. The latest advances, including Open Banking tools, are being developed to support legacy systems and complement traditional processes. Rather than a threat, it’s an opportunity: financial institutions are increasingly seeking partnerships with fintech startups that can help to catapult their operations to become more customer-intelligent businesses that offer more customer-friendly solutions.


Mastering customer-intelligence with Open Banking


Industry players in the financial sector are now trying to keep track of all the innovation and competition driving the market. The time is right for understanding the opportunities that Open Banking capabilities present, to adopt the technology and add it to the mix of tactics to master customer-intelligence.

Companies are putting their efforts on collecting data about consumers in order to understand them; this includes online habits, spending preferences, where they shop or what they buy, etc. But what about their financial information? It used to be the case that banks held up much of this information, and getting an accurate picture of individuals’ financial circumstances was a challenge; but Open Banking is changing this.

Understanding individuals’ financial circumstances is incredibly important for businesses operating in financial services, especially for those in lending and financial advice; in order to deliver the best solutions. Open Banking technology is now facilitating the collection of this financial data, for the benefit of both business and the end user.

For consumer intelligence to be effective, however, it’s essential to know that collecting data isn’t enough. The insights that are gathered from customers need to be analysed and processed in a way that allows businesses to drive development and strategies that resonate with their audience. Fortunately, AI and machine learning, are stepping in to take the weight off your shoulders. Some of the latest tools that incorporate Open Banking come with advanced features like spending categorisation, to help you make sense of the financial data that is gathered from consumers.

Open Banking allows people to share access to their financial data with regulated (or industry-approved) third parties providers. Whilst enabling access to individuals’ financial data-sharing in a secure way, it also gives customers control over their data. It’s a method that is much safer than previous ways of data-sharing, especially because of PSD2 legislation and regulations that are in place to subject the data to strong security and encryption practices.

PSD2 requires that banks and financial institutions go through strong processes for customer authentication, consent and reliability – leading to GDPR and, more recently, Open Banking. After the first six months of the initiative coming into force in the UK, findings by PwC and the Open Data Institute showed that by 2022 the market could be generating as much as £7.2 billion in value.


What kind of information can be attained with Open Banking?


When establishing a direct link to an individual’s bank, the technology can look into a specific bank account or credit card, for instance. It can then report back to the Account Service Information Provider (AISP) with extracted data on transactions and spending, income, bank statements, credit history. Because of the connection that is made to cross data between the individual and the bank, more can be achieved in terms of verifying ID and authenticating security details, which means Open Banking can also assist in anti-money laundering procedures.

The real customer intelligence trick happens when AI is able to follow up by categorising spending and flagging transactions, to help agents in financial services to assess affordability of individuals more efficiently and accurately.


The importance of capturing data in real-time


One of the key factors in achieving customer intelligence success is the ability to capture customer insights in real-time – this ensure relevance of the data, and can be a resource for a business to understand easier their customers and what works best for them.

Does this sound easier said than done? The truth is that automation and messaging technology has made great steps in gathering data in real-time and processing insights for effective follow-up, so it doesn’t have to be a laborious task.

In Ibby, for instance, we are combining the power of live chat and chat automations with Open Banking functionality. Our solution allows companies to engage in conversation with visitors and customers in real-time, in an instant messaging environment. Customers can share financial data in a secure way and when it is appropriate while chatting to agents, and share their contact details so that these can be saved into a smart CRM system, that can then trigger relevant messages at further stages of the funnel. The process of gathering data this way is real-time, smooth and painless.

Ibby can make the process of collecting bank statements simpler by allowing authentication through the individuals’ banking apps on any device, via live chat. In many cases, this involves the slickest authentication steps such as face recognition and finger-print technology, reducing friction and enhancing user experience.

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