May 11, 2020
Open banking and open finance offer the opportunity to transform the way information is accessed by customers and advice is delivered by advisers. Open Banking is already happening. According to openbanking.org.uk there are 61 regulated entities with at least one open banking proposition live with customers as of February 2020 and 204 regulated providers. The average API availability was 98.93%, with the number of successful API calls having risen from 280.5 million to 321.3 million from December to January 2020.*
As more of us are forced to conduct our work remotely the accessibility, efficiency, stability and reliability of technologies that we use to do so is more critical.
For consumers that are already anxious about their future and financial wellbeing, the ability to stay on top of their finances, plan for what’s ahead and feel in control is crucial.
For advisers the ability to stay in business, while delivering a stress free, seamless service and regulated guidance to their clients efficiently and sustainably is going to be the key focus in an attempt to survive and stay competitive.
By extending the principles of open banking to open finance we could deliver transformational benefits and improve financial awareness among consumers by giving them more responsibility and control over their financial data and seamlessly access their financial products all in one place whenever needed. Perhaps most importantly, open finance could be instrumental to increasing demand for multi-channel financial advice and enabling advisers to deliver it in the most cost-effective manner.
Easier price comparisons, product features and switching between products and providers, open finance could potentially lead to increased competition and product development and innovation, while financial advisers who can access and harness data such as client spending history and habits, their pensions, savings and investment products will be able to provide more bespoke and individually tailored advice to help clients manage their finances. For those that have the right tech stack in place, this could also be automated for those clients who are better suited to the automated route.
The concept of data sharing across the financial services industry is beneficial to all stakeholders – the consumers who can better manage their finances, as well as advisors who can benefit from improved ways of interacting with their clients, but it is fair to say that it does carry risks too. Challenges could include increased risk of fraud and scams from a consumers perspective, potential for data breaches, as well as the steps businesses will need to take to adopt open finance. This could mean costly infrastructure putting more pressure on businesses that are already struggling with tight bottom lines and cost-cutting measures.
Ultimately, open finance when delivered correctly can create a secure and competitive environment and help to deliver the right outcomes and incentives for all stakeholders. However, the technology behind it must demonstrate consistency, market integrity, as well as ensure that data is held securely, and business is conducted ethically and fairly.
Focus Solutions has market-leading adviser technology developed especially for large financial institutions offering regulated advice and large adviser firms and networks. The now:advise software solution package includes a full suite adviser software solutions as part of an end to end practice management system with cashflow planning, process automation, integrated planning tools and high quality, engaging reporting.