And am I feeling good?
Nina Simone’s ‘Feeling good’ is a great song and would make a great company anthem, but I’d bet my bottom dollar that right now no bank in their right mind would choose it
The new EU directives and regulations being introduced over the next 12-18 months are forcing the banks to rethink both their operating models as well as their customer propositions. They’re driving disintermediation in the banking sector, so it’s no surprise that they’re feeling a little blue
Partners who’ve previously strengthened their market position are now posing a direct threat to their livelihood. The imminence of open banking is enabling the likes of Google and Facebook to get a solid foot in the door. And the banks are having to face up to the fact that very soon, their customers may be stolen from right under their noses.
The Four Letter Words Rocking the Banking World
Not much to look at, but the word on the street is that they’re sending shivers down the spine of many a banking lead right now.
From January 13th 2017, the directive of Payment Services (PSD2) became enforceable in UK law, requiring UK retail banks to open their APIs up to the business world at large and tighten their technical belts, ultimately creating a new competitive landscape. On the one hand, the directive is taking away a significant chunk of the interchange fee revenue, and on the other, it’s forcing them to give their customers the authority to
approve the sharing of their personal data with any business they deem appropriate. A pretty tough hand to be dealt you might say. Arise the dawn of open banking, well suited for the nimbler and agile within the Fintech world. Definitely a directive on the side of the consumer. Not one likely to be welcomed with open arms by
General Data Protection Regulation
Enter our second four letter word: General Data Protection Regulation (GDPR) comes into play in May 2018. GDPR has been passed so as to create greater harmony across markets and companies in the way that we manage and use consumer data. A levelling of the playing field. An opportunity to clear out the data hanging around at the back of the data warehouses like an old 80s prom dress. Nostalgic but no longer deemed necessary or appropriate by the EU. From May next year, any data held that has not been explicitly consented to within the average customer lifecycle will have to be destroyed. This ‘zombie data’ as we’ve named it at RAPP, is still being collected by brands today.
But personal information collected with only a vague intention of using it for something in the future, will no longer be viable for use once GDPR legislation comes into force.
Bearing in mind the apathy of many banking customers - their indecision and inaction when it comes to switching and their disengagement with banking brands when it comes to marketing communications - we anticipate a high level of zombie data sitting at the back of the banks’ closets. So now’s the time to get their data warehouses in order. But that’s no mean feat.
Whilst consumers can feel comfortable that the EU most definitely has their back, the banks will understandably not be sitting so comfortably. There’s simply no time to sit back and play the fast follower role. Only action will give the banks a chance of staying in the game.
Time for Show and Tell
Trust, integrity and honesty are what we expect as fundamentals from our banks. During times of change, this is what we cling to.
It therefore seems imperative that the banks focus on helping their customers make sense of the new opportunities opening up to them. We know from our research, that today’s confident, connected consumer values the knowledge, choice and control to make the right decisions. Being actively seen to be on the consumers’ side would speak volumes. After all, our research showed us that consumers expect both functional and supportive relationships with their banks.
So with the dawn of a new data management era, it’s time to put that supportive role front and centre. Our research reported that on average a third of those in either the ‘happy’ or ‘cautious’ to share data camps, would be encouraged to share more of their personal information with banks in exchange for greater transparency on how it will be used. As the banks bring new products and services to market, the ones that help consumers better manage their lives, setting the right tone in terms of data usage, will be of vital importance. For the banks, 2017 needs to be all about action.
No more skeletons in their data closets. No more banking on their heritage. It’s all change. And now more than ever, UK banks need to build the right support network around them if they want to survive. After all, no bank is an island.
Aimee Bryan, Planning Partner, RAPP UK.
This was first published on The Drum.