How is Personalisation Driven by Open Banking?

Technology appears to be making the world less personal. With chatbots answering customer service enquiries and self check-out available at the supermarket, it’s easy to feel like just a number. However, the data generated and shared (with consent) by open banking, is bringing a whole world of personalised solutions to the consumer and the opportunities in this space are growing. Businesses might have less in face-to-face interactions with customers these days, but that doesn’t mean they can’t tailor-make a product or service that engenders loyalty and a a closer two-way relationship with consumers. 

In September open banking users reached two million in the UK. That means there’s a whole lot of data being produced in realtime about consumer behaviour such as spending patterns and lifestyle trends. This is where personalisation becomes possible. Imagine the scenario where a family is looking to buy a new house.  With the traditional house hunting process there’s a lot of proactivity involved. The family needs to register with multiple estate agents, set out the parameters of their search and pay a commission when a match is found. An alternative, data-driven and reactive approach would see houses for sale shown to the family via an app based on certain factors which are only relevant to them. For example, the app will know what they can afford based on aggregated banking data, it will know which location is best for them based on schools and transportation and it will know what size is suitable based on the size of the family. The personalisation can be as broad or as specific as the family allow depending on which data they consent to be shared. 

Another way in which this data sharing could be very helpful, even life-changing for an individual, is in the area of wage transparency. When starting a new job or getting a promotion, it can be difficult to negotiate a fair salary because few companies have transparent, fixed pay scales. There are often multiple factors which are considered leaving a gap for gender inequality to sneak in. It’s also difficult for companies to benchmark their salaries against competitors because this information isn’t freely available. Apps which aggregate salaries for different job titles and industries based on bank account information, can become a useful tool for both employees and businesses. Employees will know what to request and expect and companies will know what’s appropriate based on their sector. Apps can even give personalised recommendations to an individual when it’s clear they haven’t had a pay rise in years, even though that’s the norm for that particular job type. The possibilities are vast.

When consumers feel that the technology is getting personal, but in a beneficial way, they’ll be more inclined to adopt it. However, they also need to be educated on how secure open banking is and to what extent they have control over the data that is shared. It isn’t simply a matter of consenting to free-for-all access or refusing for anything to be shared at all. There are many options in between. Education is paramount and this must come from all the different stakeholders in the value chain.