Death of the sector
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Welcome to a world where the 'sector' no longer exists

The rise of personalised, data-driven services will sweep away the barriers between different industries and could spell the death of some sectors


As outsiders with more flexible and trusted brands move in and offer consumers a clearer value proposition in return for sharing their personal data, there is no guarantee today's incumbents will survive.

How will consumers react when presented with the opportunity to share highly confidential banking data that might reveal much about their personal lives, in return for access to new financial services providers?

Trust and value are key

There will be two keys issues: trust and value. Emotionally engaged trust, not utility-style trust that just reassures me the service will be identical the next time they're needed. And value will be critical because if financial services providers are to succeed in winning consumers' trust for personalised services that depend on access to their private data, then consumers must clearly understand the value they will receive in return.

In a data-first, open-API world, the financial providers consumers trust won't necessarily be banks. This could ultimately mean the end of entire brands and sectors as we know them – a grandiose statement, sure, but think about how the future is already shaping up...

Giffgaff gets in on the action

The mobile network is set to launch its own banking app this summer, targetting millennials. Thanks to the Open Banking regulations, Giffgaff's Gameplan app will offer a one-stop hub for all things personal finance. Users access spending insights to help them cut down on daily expenditures and save towards defined goals, as well as compare offerings from credit card providers, car insurance, energy providers and loans. In other words, the transparency customers crave to manage their money. And if it's their mobile network that offers that service, so be it.

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Amazon's push into banking

As a consumer today, you can use Amazon Balance, a facility you can top up on and offline; you use AmazonPay to pay for services; and, if you're a Prime customer, for every purchase via the facility you get 2% cashback. That looks an awful lot like a bank balance, with one- click pay that incentivises you to spend, as well as the benefits a bank-issued card might provide. With Amazon Pay Places, customers can use their Amazon account information to order shopping experiences in advance with their Amazon app, rather than a card.

Amazon also provides credit to online merchants and enables them to add a button on their web checkout pages that lets shoppers pay via their Amazon account info. The idea is that by doing so, customers are less likely to abandon carts and thus more likely to complete the checkout process. So, there you have payments, cashback incentives and credit/lending facilities for SMEs in one ecosystem.

PayPal targets the unbanked

PayPal Cash MasterCard lets users access the money in their PayPal account to shop online or in stores and withdraw cash from ATMs. Unbanked users can deposit a paycheque into their PayPal account. For free. Users will even be eligible for federal deposit insurance with no minimum balance.

If Amazon is lending you money, do you view it as the online bookseller? Is it now your bank? Or the rapid-response delivery firm when you've run out of washing powder? It could be any of those things at different moments because Amazon and others such as Apple and Google have trusted brands that stretch to encompass multiple service offerings. Try doing that with a bank brand... and... well, it just doesn't stretch.

Reassessing the 'bank'

So, as we move away from dumb, mass-market product-push towards personalised services and experiences that are embedded in our everyday lives and are based on the data we decide to share, the implications for banks are clear. This trend has the potential to disrupt our entire notion of a bank – and the banking sector.

APIs

"In a data-first, open-API world, the financial providers consumers trust won’t necessarily be banks…"

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If Amazon is lending you money, do you view it as the online bookseller? Is it now your bank? Or the rapid-response delivery firm when you've run out of washing powder? It could be any of those things.
Louise Beaumont

Co-chair, techUK Open Bank Working Group

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