As a bank that has built its entire reputation on customer service, First Direct is taking a different view to some of its competitors when it comes to Open Banking. Commercial Director Nick Harrison explains the strategy to Open Banking Expo…
Q: What does First Direct consider to be the opportunities from Open Banking?
A: For 29 years First Direct has embraced customer service. We have an opportunity to enhance the proposition further for our customers, to step up our game and deliver a better service.
For most banks, Open Banking is around journey enhancement, looking at how they can leverage Open Banking to make credit decisioning simpler and I would be surprised if there were any banks in the UK who weren’t focussed on that. But there is another area, which is much more complex, related to the Money Laundering regulatory requirements under Know Your Customer (KYC). Through Open Banking, it is possible to make that far more seamless than it currently is, and we have been looking at that.
We have also been thinking about how we can offer a service to both First Direct and non-First Direct customers and have been doing some proof of concept work through the FCA Sandbox. We have been thinking about how we can give customers a flavour for what First Direct is about and offer benefits without any obligation to have to take out a financial product.
What we are doing is opening the ability for non-First Direct customers to use a marketplace app through Open Banking to help them to save money. This is the bit where we think we are unique. Through “artha”we wouldn’t just offer our own products, so, if you are looking to purchase a car, for example, the app will flag the best product, which may well not be a First Direct product. It is about demonstrating a service offering. And yes, maybe the customer will look to First Direct in the future for their banking, but that is not a primary objective.
Q: How separate are First Direct’s Open Banking objectives from parent company HSBC?
A: I am aware of what HSBC is doing, and what other competitors are doing, but our strategy is unique for what we believe is right for First Direct. WE have the autonomy to take that out in the way that we want it to. HSBC are fully behind what we are doing, but it is our strategy. The strategy for First Direct is owned by First Direct. We have developed the strategy as to where we believe we want to take First Direct from the assets that we have available. First Direct is all about pioneering amazing service. So how do we take that further?
Q: What research informs strategy at First Direct?
A: We commission research from third party levels like Ipsos but also conduct specific research internally. We have a digital testing community through Fdesign, which has a few thousand customers to test products, give feedback and tell us what they would like us to do to improve things.
Q: What have you learnt from your initial research into Open Banking?
Consumers are going to understand Open Banking at some point, but that pivotal point hasn’t been reached just yet. There is a proliferation of choices. With so many different choices, it will be important that a brand emerges with a high level of trust. All of our research suggests that consumers are looking for someone to help them and that is where we think First Direct has a part to play. We believe we can leverage that.
Q: What are the next big projects on your desk?
A: The first one is [marketplace app] artha. We recently graduated out of the FCA Sandbox. As part of the proof of concept, we agreed to have no more than 6,000 consumers using artha. Now we have graduated out of that, we have a ton of information about what worked and what didn’t work. We are in the process to building that out. We are looking to kick start that in the New Year.
Another one is the continued move towards digital tools. If you want to fulfil a need digitally, we need to make sure that there is a good digital journey for the customer. Anyone can build a mobile app, but how do you do it in a way where customer service captures the human element?
The final one is making sure that we do product and proposition related research as to what our customers want. We were the first bank in the UK to offer the incentives of free gifts rather than cash to move a current account. We are doing research as to what our customers would like and what would be an appropriate product to meet those needs. That is across a couple of different products not just current accounts.
Q: What do you consider to be the big story in Open Banking that the media have missed?
A: I think Open Banking is in such early days. Open Banking is the biggest thing to hit financial services years and yet, the majority of consumers don’t know about it or understand it. From our perspective we are looking to do pilots, proof-of-concepts and testing to learn what consumers want. I’m all for competition, but there is the possibility that there will be too much choice and consumers won’t know what to do. We think we have a strategic slot there to help consumers.
Nick will be speaking live at the Open Banking Expo next month and delivering further updates on its Open Banking proposition, Artha.