Innovations in the digital information technology industry have taken a swift direction. These innovations are opening up opportunities geared towards improving economies and alleviating various hurdles encountered by digital consumers, and the industry is headed for victory. In recent times, we see a rise in the innovation of tools that are artificially intelligent (AI-controlled), mostly developed by organisations and industry experts, and these tools are contributing to noticeable improvements in services provided by different sectors of the economy. Above all, the reigning innovation in the financial technology space is called Open Banking, which has created a lot of benefits for business drivers and their customers.
Open Banking is an industry change that is opening up access to financial data, enabling innovation, and increasing competition in the financial services industry. A common phrase used by financial system experts is, “We are still scratching the surface of the evolution in Africa,” suggesting that the innovations in the payment system have only just begun. An example of innovation is the advent of the Open Banking shift; another huge service being used in the financial industry.
While the phrase “Open Banking” is perceived by many as a solution solely for banking needs, it is more than that. Outside the financial industry, Open Banking can be seen as a platform serving multiple industries geared towards providing excellent customer service. It would benefit leaders who aim to achieve 100% customer retention to practise and apply Open Banking ideas, rich data into business. It is no longer news that Open Banking is the key to exposing data-driven experiences for higher income and customer satisfaction.
The banking industry is known to have rich and complete data on customers, from when they are on boarded till when they start transacting. The availability of this data gave rise to Open Banking, which I also refer to as data-as-a-service.
Stepping outside the financial industry, user experience must be considered when making different API calls. One of the disadvantages of applying Open Banking is the absence of seamless customer experience (friction). Open Banking API needs to be optimised for mobile users to reduce friction during the customer journey process.
For instance, if you have made a payment or viewed your balance with your loan company, chances are you have used Open Banking services. You may have noticed that you have to exit the initial app to be able to authenticate yourself with your banking or insurance provider, as the case may be. This process might involve redirection to a web browser for the authentication process, and thus create browser loading time. Every customer today is either impatient, not educated, or not IT savvy; they desire to complete the transaction within seconds and move on to other things. Product managers ought to ensure the customer transaction journey is enhanced to be frictionless. Having superior user experience by bypassing certain steps in the user journey, easier integration, and faster time to the market (this means a lot to the sales guys who are always on the road to acquire more customers), operational issues will be reduced (No more timeout errors).
What is Open Banking to a homeowner or property management company? Most homeowners prefer to carry out the tenant selection process themselves. In contrast, others prefer to ease the stress by employing a property management company. In either case, the process of getting to know the right and financially enabled tenant is the job to be done.
Nobody aims to rent an apartment out and then face issues in getting the monthly house rent. The innovation of Open Banking API has automated this process. It can transform the tenancy selection process by providing property managers and homeowners with accurate financial status of prospective tenants based on income, existing rental payment, and other expenses (with consent agreement in place). This way, Open Banking has reduced the stress undertaken by homeowners or letting agents and tenants in the paperwork process.
As we experience a spike in the adoption of financial inclusion in most African countries, the application of Open Banking will benefit the super-agents and their customers. With API integrations, super-agents can offer loyalty programs without issuing cards or giving stickers. With Open Banking, they can operate a seamless loyalty program that identifies consumers’ transactions at the agent shop, which will help them retain customers. This process can also help deep dive into what services customers use at their location (online or in-store). With this rich data and leveraging on consumer spending patterns using APIs embedded in their e-commerce website, super-agents can generate relevant offers to their clients at different times of the year.
The application of the Open Banking principle benefits several industries outside financial services, for example, the Telecommunication Industry, Utility companies, and the health industry, to mention a few. Leaders in the digital technology sector should strongly consider developing trends and opportunities created by the Open Banking shift and data. This shift has helped and will continue to help business leaders in driving their businesses while they put their customers into consideration.
