From sole traders working from home to multi-billion pound businesses running operations remotely, Covid-19 restrictions have brought into focus our increasing reliance on digital platforms to underpin our society and economy.
Businesses across the globe have scrambled to hasten the adoption of technology designed to empower remote working. Video conferencing has quickly become the new norm, replacing face-to-face meetings, and a whole host of other project management, messaging, and document collaboration tools have been rolled out.
With more and more people consuming online services, businesses must constantly review, and accelerate their digital transformation strategies, while keeping abreast of future trends. For financial services companies, Open Banking solutions can provide quicker, more accurate and informed decisions that improve both customer acquisition and satisfaction.
For example, within the mortgage sector, platforms are available that simplify and streamline the underwriting process. These tools utilise mortgage applicants’ bank transaction data, reducing the time taken to obtain proof of identity and income. This in turn, cuts the workload for mortgage brokers, and provides customers with a more positive experience.
Digital onboarding is becoming even more pivotal given that many financial and professional services companies have shut their doors to the public during the current pandemic. Changing consumer behaviour, as well as economic and social considerations, mean much less face-to-face customer onboarding will occur across the financial services in the short, medium and long term. This is especially true for businesses such as mortgage lenders, building societies, and financial advisers. The pandemic has expedited existing trends, forcing and incentivising companies to react.
To survive, businesses must adapt and accelerate their digital customer acquisition offering, while retaining robust compliance with regulation and strict anti-fraud mechanisms. A pathway for this much needed digitisation can be achieved via intuitive Open Banking KYC digital platforms, involving a blend of ID verification tools, bespoke customer journeys and seamless integration into existing systems.
Open Banking solutions, and the extra layer of digital data they provide, can also help in the fight against financial fraud. The latest figures from Cifas show cases of mortgage application fraud rose 14% in a six-month period, with submission of false documents up 32%*. The Covid-19 lockdown has also seen the exponential rise in online financial scams, as fraudsters leverage people’s anxieties and uncertainties through a multitude of malicious methods.
Cybercrime can lead to the harvesting of personal data, identity theft, high-jacking of online accounts and severe financial repercussions for both customers and businesses. Pulling digital data directly from the applicant’s bank account means brokers and financial advisers can greatly reduce the threat of fraud, eliminate the risk of false physical documentation and perform a much deeper dive into potentially suspicious or unusual trends within the applicant’s data.
As we’ve witnessed during the unforeseen events of the last few months, companies who are technologically agile and advanced in their digital transformation strategies have been able to transition far more easily to a predominately virtual business environment. To keep pace with the market, competitors and changeable consumer preferences, businesses must constantly survey what’s next on the horizon. One such development is Open Finance.
Open Banking in many ways has laid the pathway towards an Open Finance world, which will utilise and build on the same basic framework. By allowing consumers and SMEs to access and share their data with third party providers, innovative products and services can be built which meet the future needs of businesses and their customers. The differentiating characteristics between Open Banking and Open Finance are the breadth of products covered, and the transparency of data usage, storage and portability.
Open Finance will theoretically allow an app to be developed that displays the current status, balance, or history of every financial product an individual owns. They will be able to access their banking, savings, investments, pension, and mortgage products all via one interface, which will also provide insights, trends and comparisons with similar financial products.
Open Finance has the potential to irrevocably change the financial services industry, unlocking benefits for providers and end users. It’s an initiative that’s being embraced by the FCA to stimulate greater innovation and competiveness, and it will inevitably permeate every part of the sector, including banks, credit reference agencies, financial advisers, fintechs, debt charities, insurers, investment managers and mortgage brokers.
The changed working environment brought about by the Covid-19 pandemic has reiterated that digital transformation is a constantly evolving process, with no definitive end goal. At its centre is a desire to provide improved services as demand, technology and preferences shift. Once one hurdle has been cleared, another will take its place, and companies who fail to adapt to current and emerging trends will not be setting the pace.