26 May COVID-19 PANDEMIC: THE GREAT ACCELERATION TOWARDS OPEN BANKING
COVID-19 PANDEMIC: THE GREAT ACCELERATION TOWARDS OPEN BANKING
DIGITAL ADOPTION AND THE SHIFT IN BANKS’ PRIORITIES WITH NO GOING BACK
It’s no secret that the pandemic has condensed years of digital transformation into the last several months. Banking by no means has been immune to this great acceleration: during the lockdown, banks have shown what is possible in terms of speed and innovation and there is no going back.
Juniper Research predicts that the total number of online and mobile banking users will exceed 3.6 billion by 2024, and that online and mobile banking growth is expected to increase by 54% compared to 2020.
In 2020, Open Banking has made significant progress, having recently launched across much of Europe and starting to emerge in other markets. There are two primary reasons why Open Banking is disrupting the banking industry so much:
-Firstly, banks have begun to recognise the competitive advantage of a more open approach. There is increased awareness towards the importance of offering a superior Open Banking experience and the compelling differentiator this represents.
-Secondly, legislation: PSD2 implementation has forced banks to accelerate the steps to take for achieving compliance.
Accelerated speed has also been seen in decision making and delivery in most banks, with many building new digital capabilities made available in weeks instead of months.
Banking industry: three key aspects to focus on in the changing scenario
The Consumer Pulse Survey on COVID-19 conducted by McKinsey in mid-April 2020 in France, Germany, Italy, Spain, Sweden, and UK, showed how customer behavior and needs had changed in only one month during the first lockdown: in terms of digital engagement levels had already climbed up to 20 percent, and the use of cash had halved.
The shift to digital services is now an inevitable evolution: in just a couple of months, customers’ adoption of digital banking has leapt forward by a couple of years. April 2020 saw a 10 to 20 percent rise in digital banking use across Europe. Many Italian banks found themselves striving to enable every single one of their customers to use digital banking. Such a jump in adoption opens the door for banks to turn digital channels into real sales channels, not just convenient self-service tools.
COVID-19 has triggered the need for new financial products, including alternative payment solutions. Banks must meet those needs to stay competitive.
Creating a people-first experience
In their push to stay relevant, most banks have concentrated their digitisation efforts on the requirements of Gen Z and Gen Y, a growing potential customer base that takes frictionless experiences and personalised digital interactions for granted.
However, the accelerated digital shift caused by the COVID-19 pandemic has transcended age boundaries, forcing previously hesitant but loyal customers to move online.
For example, a recent McKinsey study conducted in Germany found that the uptake of digital channels since the start of the pandemic spanned all age groups. While it was especially high in the under 25s, the increase in the over-65 age group was 107 percent.
Therefore, banks should be able to efficiently meet the needs of all customers and be inclusive towards less digitally savvy individuals.
Even when it comes to payment solutions and the choice of tools made available by banks, the real differentiatiors are now trust, user experience and security, rather than mere technology.
All these factors are part of a customer-centric approach, which is the first step towards achieving customer satisfaction.
To fully embrace the potential of Open Banking, it is now a must for banks to look to actively partner for success. Open Banking requires and depends on partnerships—from suppliers to business collaborators and from vendors to customers. Banks have to build an ecosystem of alliances.
Strategic partnerships allow them to improve operational efficiencies, cut costs and better serve their customers with new flexible solutions. By missing partnership opportunities, banks run the risk of losing out to the more innovative challengers.
Considering the accelerated digital adoption and the shift in banks’ priorities caused by the COVID-19 pandemic, it is crucial for banks to improve their digital engagement tactics and the overall customer experience.
To stay relevant, banks should look at Open Banking as an opportunity to work with strategic partners and play a leading role in the new scenario. MyBank, born from the collaboraton between banks/PSPs, is not a substitute for the banking core systems as it rather digitizes and speeds up processes to the benefit of the entire ecosystem.
To this extent, MyBank is a valuable partner for banks: its e-payment solution –an immediate wire transfer with real-time confirmation– relies on the online banking environment already in place and allows them to offer a secure, easy-to-use, alternative digital payment tool.
Fully compliant with European PSD2, AML and GDPR regulations, MyBank supports banks with its customer-centric solution, boosting customer satisfaction and loyalty.
26 May 2021