Imagine gaining deep data insights into all your customers, allowing you to create highly-tailored products that drive your business’ sales and increase customer retention and satisfaction. Moreover, imagine that this data could supercharge product innovation, streamline operations, improve customer experience, slash your overheads and improve efficacy for your business.
With the dawn of Open Finance in Australia, this is now a reality for financial services companies, fintechs and related industries.
‘Open Finance’ allows sharing data across multiple financial institutions - all driven by consumer consent. Crucially though, it also allows organisations receiving this data, to do something with it once shared, by taking a set of actions such as making a payment. Open finance’s benefits are wide-ranging and completely redefine how consumers interact with a financial product or service.
The ultimate goal of Open Finance is personalisation: rewarding consumers for sharing their data by giving them access to the best products and services in a way that saves them time and money.
But the benefits are not just for the consumer. Used strategically, Open Finance presents a huge opportunity for businesses to innovate and reap significant economic benefits. Used well, companies can create compelling products based on real-time data that out-perform competitors and win customer loyalty.
It’s a win-win. Consumers get competitively-priced, highly-personalised products that best suit their needs and lifestyles, and businesses get access to data that allows them to innovate new products and services that are highly attractive to the target market.
Open Finance is also more sophisticated than simply the sharing of consumer-consented data. It covers the whole financial services landscape - from crypto wallets to payments, and allows for a suite of actions to be performed based upon this data. All the while, a business can derive insight from a consumer’s financial position having received their consent.
So how does Open Finance work? New government policy introduced to support Open Finance in Australia means that a customer can now instruct their financial service providers to give their data to another organisation that’s accredited to receive it. The recipient organisation can then then use this deep data to price or expand a competitive offering.
Four critical components enable an Open Finance ecosystem:
1. Consent - consumer consent is the keystone of the Open Finance ecosystem. This centres around a robust consent framework that securely conveys and manages a consumer’s consent in regards to what data they want to share, how long they want to share this data for, and for what purpose.
2. Data - this element comprises a consent-sharing model that is compatible across financial organisations and multiple data sources allowing for the easy sharing and interpretation of consumer data;
3. Insights - obtaining deep insights from the data shared by the consumer and;
4. Actions - deciding what actions to take based on the data once it is shared.
Here’s an example of how an interconnected Open Finance system could work in reality showing how booking a holiday overseas can be improved by Open Finance data:
Typically, booking a holiday would involve a number of different websites and apps, whether it’s to book flights, make sure your travel insurance is valid, or check to see if you have the right vaccinations to travel. With Open Finance data enabled, this could all be combined into one experience, making the whole process seamless and reducing the likelihood of forgetting something important.
Specifically, the purchase of accommodation in a certain location could trigger any number of actions via Open Finance including:
A check to see if you’ve already booked flights and if not, to search for the best flights
Checking your travel insurance is valid and best suited for the kind of trip you are taking
Ensuring you have the relevant vaccinations to travel
Verifying your passport is up to date
Establishing if all visas are in place
Checking the mobile phone cost at the destination and showing you better options
Recommending which of your bank cards and services will be lowest cost to use at your destination
Informing all your banks that you’re away to help prevent fraud via any card-present purchases in your home location
Automatically transferring $200 once your salary is deposited, to a ‘Holiday’ saving bucket
Creating a set savings goal in the lead up to the departure including the option to visualise how much extra you want to save to make the holiday ‘extra’ enjoyable
In this example, you can see how there are plenty of opportunities for businesses to upsell and improve the customer experience. Harnessed well, the interconnected Open Finance model can revolutionise business operations and provide multiple new revenue channels.
The future of business lies in a truly interconnected Open Finance ecosystem based on a robust consumer consent framework. This will revolutionise the financial services sector and every area that it touches: providing better deals and services for consumers and enormous growth and revenue opportunities businesses.
For more information on Open Finance and how your business could benefit, download the Basiq white paper on the subject here