In the era of web3 and ‘everything digital’, highly personalised financial experiences aren’t only commonplace in banking, but thoroughly expected by customers too. With traditional high-street providers falling behind neobanks, the gap between branch-based banking and more personalised online experiences is widening.
To attract new customers, generate engagement and enhance loyalty, innovative strategies are now required.
What is personalised open banking?
Before diving straight into personalisation, it’s important to understand the core concept of open banking.
Open banking can be defined as an integrated technology system that connects financial institutions and third parties. The system provides the secure transfer of data, and reduces friction for a seamless customer experience.
Therefore, personalised open banking adds to the concept by incorporating the individual experiences of the customer or their specific historical data. For example, some of our clients at Bud use real-time transaction data (instead of, or in addition to, traditional credit reference agency data) to make lending affordability decisions.
Incorporating customised elements goes beyond the traditional interactions between consumer and bank, instead, offering the chance for financial institutions to better meet customer needs – and there has been a huge uptick in consumers switching their bank accounts.
Imagine instead, that your institution is able to automatically identify the segment of customers most at risk of switching, and target them with better offers or more personalised services?
Leveraging personalised customer insights through open banking can help with exactly that, while also increasing confidence in lending decisions and product up-sell rates.
What are the types of open banking data?
Customer-consented data, obtained via open banking, can reveal a lot about an individual’s circumstances, financial position and preferences, for example:
- Transactional data: real-time spending habits, earmarked funds for bills or standing orders and insight into the merchants a customer interacts with. For example, if somebody regularly receives £2200 categorised as “income” but it didn’t arrive this month, the person might have lost their job - and a loan offer might become more relevant for this individual.
- Demographic info: geographical location and account ownership (sole/joint) data can be used to tailor product offerings to specific areas. For example, if there is a high concentration of young families in a particular area, products and services that are tailored to their needs, such as student loans or mortgage products, can be facilitated effectively.
- Account and balance information: Using this information we can understand which accounts a customer has, how their balances change over time and whether they use an overdraft. For example, if a customer is currently paying overdraft fees on an account, they may be primed to switch accounts or ready to take out a personal loan.
Each of these personalised data subsets can be collected through the Bud framework, which prioritises data privacy and security.
When it comes to data collection and usage, consumer consent preferences means customers always have the option to opt-in and out of having their data used by services.
Selecting 'yes' when opting in covers:
- what data is collected
- how much is collected
- how long it can be stored
- whether it can be shared
- who it can be shared with
This is incredibly useful for financial institutions and third parties interested in leveraging personal information, since it sets the precedent for data transparency and builds trust with the consumer.
How does personalised open banking drive customer engagement?
Each financial institution looks to maximise their engagement since more customer interaction is likely to grow their wallet share.
For example, a customer may bank with company A but hold a credit card with company B. The customer is not happy with the credit card, experiencing high fees because they regularly forget to do a balance transfer.
- Company A starts providing proactive notifications to prompt the customer into better spending habits within their app
- By driving these engagements, company A builds trust with the customer, while company B’s lacklustre approach only causes negative reactions
- Moreover, company A sends a timely offer to the customer about their new credit card product, which allows users to set up an automatic balance transfer
Thus, company A has an opportunity to steal the wallet share from their competitor.
There are many other benefits to driving customer engagement, including:
- Improved cross-selling opportunities: tailored product recommendations can enhance conversion rates.
- Higher customer satisfaction: proactive notifications add value to the customer.
- Enhanced brand loyalty: personalised financial advice is genuinely helpful, creating positive associate with the brand.
Partner with Bud for seamless personalised customer experiences
Although the most prominent banks are putting focus on their digital transformations, there is still a huge gap between the frontrunners of personalisation and those lagging behind.
An ongoing three-year benchmarking study by Peter Ramsay highlights this stark difference in terms of user experience. For example, challenger banks like Monzo and Starling update their app capabilities every five to six days, while traditional high-street banks like Co-op and Santander take between 50 and 80 days on average.
Similarly, an Ipsos survey commissioned by the CMA in 2024 comparing the quality of services delivered by mobile banking and digital financial services providers revealed that organisations who invest in their digital experiences are much more likely to be recommended by customers.
Fortunately, this is where Bud comes in.
Launch or revitalise your open banking offering through personalisation with our real-time transaction categorisation, merchant ID and customer insight capabilities.
Why not provide personalised support, targeted offers and improve customer satisfaction to build a better open banking experience and get ahead of the competition?
Looking to get started? Get in touch today
