Open Banking is about to hit a ‘tipping point’, say leading fintech Frollo, with brokers urged to inform their clients of the huge potential of technology in the sector.
In their State of Open Banking report for 2021, they cited the growth of the Open Banking ecosystem and the increasing number of use cases as the point at which the tech becomes ubiquitous.
“We’re at a tipping point right now,” said Piet van den Boer of Frollo. “In the last 6 months, 85 banks started sharing data, 10 new Data Recipients got accredited and 5 new CDR access models were announced.”
“Last year’s State of Open Banking showed 45% of respondents wanted to start using Open Banking data within a year. That number is as high as 62% today.”
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“What’s different today is that the conditions are so that you can actually launch a compelling customer proposition - Open Banking is finally ready for take off.”
“The next 12 months will be about increasing access and testing new use cases. Many more consumers will be able to use Open Banking in many more places. Frollo alone will be launching at least 6 or 7 Open Banking clients in the next 6 months.”
“Consumer uptake will follow access to compelling use cases. So when businesses find use cases that work and start to scale these, we’ll start seeing consumer uptake increase significantly.”
For brokers, now is the time to familiarise themselves with the tech potentialities and the new regulations so that they can provide the best proposition to their customers.
“Open Banking will provide brokers with instant access to a comprehensive, verified and up to date view of their customers’ finances, like the Financial Passport Frollo recently launched with REA Group,” said van den Boer.
Everything brokers need to know about Open Banking
“Compare this to the old way of doing things, where consumers have to share their bank statements and brokers manually comb through them to figure out their income and expenses, with lots of back and forth to get the right data and interpret it correctly.”
“That’s all automated now, using our AI to assign income, spend categories, assets and liabilities - so that the broker and their customer can spend their time having a more valuable conversation.”
“Another big opportunity for brokers is Personal Finance Management. By providing their customers with a money management app that aggregates all of their financial accounts, brokers can keep their customers engaged and provide them with ongoing value.”
“For example, a broker can get notified automatically when something changes in their customer’s financial situation and reach out at the right time.”
“Broker groups and technology providers are getting ready to launch solutions for brokers to use this data in their workflow, and the new rules for ‘Trusted advisers’, will allow brokers to access this data without the need to get accredited.”
“The success of Open Banking depends on a number of factors, including consumer awareness and understanding. But most importantly, availability of compelling use cases. Research we did earlier this year showed that most consumers are excited about the services that could be offered with Open Banking, including streamlining the lending process.”