Open Banking: 6 ways startups and banks can utilise this technology
For the most part, banking stays consistent – we have our apps, ATMs and contactless payments, and little else disrupts the routine.
But Open Banking has been shaking things up for the past few years and it’s gaining traction once more. Not only will this spur technological innovation and digital services, it will also benefit merchants by removing chargebacks and non-payment risks.
Open Banking spans a broad topic but, at its core, it means that consumers own their financial data and have control over who can access it. If someone wants to connect a budgeting app to their bank account, they can provide the app with permission to do so.
It means that customers have greater control over their data, but also that companies can only retrieve that information if they have permission to do so.
Boost conversion rates
Open Banking payments are the perfect solution to providing a seamless, mobile-first experience for customers, as businesses can eliminate the need for tedious data entry that can impact conversions and abandonment rates.
For ecommerce startups, in particular, being able to manage your business’s money in one centralised system using an online business account, can help boost profits, improve efficiencies and aid success.
One of the challenges of running an ecommerce business is feeling confident that payments will go through when a purchase is made. Open Banking can improve transaction success for complete peace of mind.
Onboard customers quickly
Verifying accounts and identities are a big part of so many businesses, and open banking can enable companies to verify those identities much faster. Companies can check the authenticity of customer identities, bank information and other vital details that will accelerate the process of understanding who their customers are, as well as reducing complexity.
These technologies have the potential to make it easier for customers and financial providers to connect, for benefits to both parties. Customers will be pleased that there are few hoops to jump through or documents required to sign up for services, and companies can ensure that all legalities have been checked off to keep the business compliant.
Understand customers on a deeper level
In recent years, the focus has shifted to delivering personalised experiences for customers. Bespoke, tailored experiences are great customer experiences and the more data businesses have access to, the easier it is to offer individualised services. Open Banking provides valuable information about users’ finances, lifestyle and spending habits that can all be used to deliver tailored products and services.
The human touch is incredibly important in an industry as competitive as banking – customers expect to be treated as individuals and receive products, services and favourable rates as a result. This digital innovation can help startups separate themselves from their competitors and encourage customer loyalty from the start, through delivering personalised offerings with ease.
As a fledgling business, being able to simplify tasks and processes is incredibly helpful to allow staff to get more done week to week. Often, startups are working with smaller teams and everyone in the company needs to wear multiple hats to get things done. This can mean that processes and workflows are complex and time consuming.
Being able to automate important tasks makes it easier for everything to get done, and to a high standard, to keep the business working efficiently. Integrated systems work better when companies have easier access to data, and Open Banking can help startups access this information.
Running a startup is challenging and to make sure the business is a success, it’s vital that owners stay on top of payroll, accounting and auditing. Open Banking makes these management tasks easier, so that owners can focus their energy elsewhere to build the business.
Keep costs down
Costs and expenses are another aspect of running a business that all business owners need to take note of and approach with caution. In the early stages of launching a brand, in particular, overspending can make or break the business.
With Open Banking, business owners can reduce merchant service fees, since card readers and POS terminals aren’t as essential. This technology also supports larger payments at a reduced fee, compared to card-based payments, which can help to reduce operational costs for small businesses.
Open Banking is a valuable business solution for startups in numerous ways, providing a way of solving different business problems with automation and access to data.
Open Banking removes the complicated manual processes and delays to help businesses provide a quicker and more efficient service.
Startups and small businesses can maximise efficiency and deliver a better customer service through utilising technology and continuously innovating, and the changes that Open Banking can provide can make running a successful business easier to achieve.
This article was written and contributed by digital marketing specialist Harvey Holloway.