Open Banking: The Customer Experience Headache

Nearly 14 months on from the launch of the UK’s version of open banking, we continue to move slowly towards its goal of creating greater competition in financial services by making customer data more portable and accessible. It’s less of a sprint, more a marathon.

But important progress is being made. Recently, M&S Bank introduced a new service that uses open banking to speed up mortgage applications. Customers can now use a secure open banking platform to share their financial records, rather than supplying current account statements manually.

However, great propositions are only one piece of the Open Banking jigsaw.

Our research has identified the key elements needed for the development of successful Open Banking products and services. Chief among them is the customer experience.

Put simply, a compelling proposition has to be backed by good user experience. There is little point stoking customer demand and interest if users are frustrated by a poor experience when they attempt to take advantage of the product or service.

Currently, the account linking process is a real friction point in the Open Banking customer journey. Right now, most users who start the Open Banking linking process don’t complete it.

That’s not a sustainable conversion rate for any business.

And that friction in the user experience is caused by a number of factors.

Most important is the authentication process.

The reality is that digital-savvy bank customers access their accounts daily using their mobile banking app. The painful experience of initially logging into the mobile banking application is a one-off event. Pin codes, fingerprints and facial recognition then become the log-in mechanism.

This means that bank customers now struggle to remember the assortment of customer IDs, passwords and memorable information required to authenticate their accounts. That’s the information that’s buried away in a lever-arch file or drawer at home.

But that’s the information that’s needed to link an Open Banking account for the CMA9 banks.

As a result, many Open Banking-enabled products fall at the first hurdle. Time-poor customers are giving up because the information needed to link their own account to the new service is not easily accessible.

Linking through biometric authentication, or other simple means, is key to conversion.

Compare the account linking process from the CMA9 to the account linking process for Monzo and Starling. They have created two-factor app-to-app authentication processes using QR codes and e-mail addresses which are easy for customers to use, but still safe and secure for account linking.

As a consequence, the Open Banking Implementation Entity (OBIE), the body responsible for the UK’s Open Banking standards, has created a set of customer experience guidelines together with a mandate for all CMA9 banks – the UK’s nine largest banks, all of which have been ordered by CMA to implement open banking – to have implemented app-to-app authentication functionality by mid-March.

The rapid roll-out of these user experience improvements are absolutely critical to the success of Open Banking. The whole industry is waiting with bated breath.