It’s Time for the Banks to Play Catch Up

This month, Facebook launched Messenger Day, a feature that lets you post pictures and videos with a 24 hour shelf life. Snapchat may have got in there first with the broad concept, but Facebook has given it a twist by formatting the feature to encourage users to get together offline. A billion people worldwide use Messenger and Facebook has identified a way to deliver additional value to them.

Exciting Innovations

Google and Amazon are constantly innovating too, creating services designed to become an integral part of our daily lives. The Google Home smart speaker will hit UK retailers this week, letting you play music, check the weather and control connected smart home devices, using just your voice. And in February, the US Patent and Trademark Office granted Amazon a patent to guide packages released from drones safely to the ground. Our shopping will soon be parachuted into our back gardens. How great is that!

This is all exciting stuff and, as users of Facebook, Google and Amazon, we expect these global innovators to anticipate our every need and identify others we didn’t even know we had. We have a relationship with them, they are part of our lives and, whilst they sometimes do things that irritate us, we generally forgive them and assume that we will keep moving forward together.

Banks are Falling Behind

It is imperative that the banks start to catch up with these global brands and start to create products and services that weave themselves into the fabric of our working and social lives. The advent of open banking is the key that should open a very powerful floodgate of innovation and allow the banks to create and nurture more interactive and meaningful relationships with their customers.

A Unique Opportunity

Open banking is the umbrella term for the two new pieces of regulation, the Competition and Market Authority’s (CMA’s) “Open Banking remedy” and the European Payment Services Directive 2 (PSD2). When it comes into effect in January 2018, it will require banks to open up Application Programme Interfaces (APIs) so that customers’ transactional data can be shared between organisations and be incorporated into third party applications. And of course that means the market is blasted wide open for both banks and innovative developers and fintech companies to create and deliver truly innovative products and services that give customers more choice, more flexibility and more control over their financial lives.

Are the banks ready for this? Some are, some aren’t. At Castlight we have already developed an API, which we use to deliver our Affordability Passport® product. And some of the UK banks are using our API to give them a head start on open banking. These are the banks that will be able to hit the ground running next January and start to give Facebook, Google and Amazon something to think about.

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