Open banking rules to trigger new wave of challengers

Tech companies, retailers and price comparison websites could become major banking brands says Deloitte on the release of research which reveals that a significant number of consumers who already use mobile banking would be willing to share data with traditional retailers.

The consultancy believes that the introduction of Open Banking rules across Europe will rapidly alter customers’ perception of banking from a ‘closed’ model where most or all services are provided by a single institution, to an ‘open’ model where they will be able to access multiple products and services from potentially dozens of providers via a trusted banking brand.

Research commissioned from 2000 UK adults by YouGov finds that 58% of consumers with mobile banking say being able to complete more banking-related actions through their app would be an important factor in persuading them to switch to a mobile-only institution. Forty-nine percent would trust a mobile app from a digital payments provider for managing their financial accounts and services, while 43% would trust a mobile app from a traditional retailer.

Neil Tomlinson, head of UK banking at Deloitte, comments: “Open Banking could ultimately challenge who owns the primary customer relationship. Competition is also raised when personalised comparisons between providers are made clearer. However, whilst the threats are greater than ever for banks, so too are the opportunities.”

He says that those banks that embrace it have the potential to create new sources of revenue and new, highly tailored products, services and solutions. “Incumbents are starting from a position of strength with their established household brands, existing access to current customers and expertise, which provides a significant advantage.”