Easier access to data has become a hot topic across the financial sector. To fully embrace Open Banking, a clear strategy is crucial. Rachael Sinclair, director of strategy and planning at Nationwide, speaks to Briony Richter about how the building society is rising to the challenge
The potential benefits of Open Banking are substantial: enhanced customer experience, new revenue streams, potential new partnerships and a sustainable platform for underserved markets.
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Speaking to RBI, Nationwide’s Rachael Sinclair describes her responsibilities as director of strategy and planning. “My role is very much about setting the strategy development and the formation of our strategy,” she says.
“Owning the execution plan and, through that, providing and finding the right insights with the leadership team across the organisation to make sure we are focusing on the right things, keeping our minds fresh. I came to the role in July and I’ve been at Nationwide about 10 years now, in various different roles.”
Regulatory and technological developments are forcing banks across the UK and Europe to up their games by opening up their systems to APIs. If banks embrace this, they will be able to become a bank that not only maintains a customer base, but significantly grows it.
Open Banking for Good
Detailing what Nationwide has been up to since Open Banking launched, Sinclair highlights:
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By GlobalData“We, like other organisations, are following the regulatory path in terms of our development there. That’s all about enabling consent. We have given customers the ability to use our mobile app and internet bank to view account and transaction information.
“Open Banking is a set of cases, and there is an ambition to open up the banking world. What we came out with in March was a real, clear statement that Open Banking is a real transformative moment in financial services.
“We are leading [joint initiative] Open Banking for Good. The reason for doing that is that we want to bring together partnerships with commercial organisations, with charities, with fresh agencies, to find solutions that are supporting the financially squeezed.”
Research from Open Banking for Good suggests that as many as 12.7 million people in the UK could be financially “squeezed” – having significant financial responsibilities but little capacity to cope with sudden financial changes. Open Banking for Good aims to bring together different organisations with people to create solutions based on Open Banking that will inevitably improve consumers’ financial capabilities.
Open Banking not only enables banks to connect data, but also to connect that data to the device that the vast majority of UK consumers use today: the mobile phone.
Continuing, Sinclair notes: “With Open Banking for Good, what we are trying to do is demonstrate the benefits of Open Banking to society, and working with charities like Money Advice Services and Money Advice Trust. We have committed to run a fintech challenge that demonstrates the challenges that are felt by the financially squeezed. Those people find it really tough dealing with financial shock – that moment where you have an unexpected payment such as your washing machine needs to be replaced or you have forgotten about car insurance.
“They manage their money day to day, but they are really active digitally, so what we thought was how we bring these sectors together to find solutions and scale solutions to help those people.”
The challenge is live now. As part of the £3m ($3.8m) fund, Nationwide is making strategic investments in and partnering with early-stage fintechs. It also hopes that exploring innovative products and services will provide real benefits for the building society’s members in the future. The project is focusing primarily on three main areas:
1. Income smoothing: Helping with regular bills, payments and fraud planning. Many consumers can experience fluctuating incomes. Nationwide data revealed over 60,000 members receive substantial income from the gig economy. Open Banking can support balancing this;
2. Income and expenditure: Using Open Banking, with its transparency of data, to help people have a more dynamic view of their income and expenditure. Nationwide receives over 5,000 calls a month from members who are approaching financial difficulty. Automating an income and expenditure profile through Open Banking could make it faster and more accurate for customers, and
3. Money management: How organisations can connect with people to embed healthier financial habits.
Open Banking presents a huge opportunity to support every consumer with managing their money. The Open Banking for Good challenge is a great example of how collaboration in this new environment can foster a fairer financial landscape.
It is a way of getting ordinary people to try this new way of banking and sharing their data, but seeing in it real value to them.
Investment and adoption
Nationwide has certainly been investing in new ways to embrace Open Banking. In September, it announced that it would spend an additional £1.3bn on technology.
At a time when customer expectations of service are rapidly changing in a digital world, Nationwide is investing to ensure that it provides the best services.
“In total there is a £4.1bn commitment to our network. We’ve just come out with the additional £1.3bn, which is very much about focusing on the service transformation. It will go towards creating the seamless experience across our services because you need to make your digital investment work in your branch network and in your contact centres. We are introducing automation and machine learning to the simple parts to enhance them.”
Another challenge that all banks have faced with Open Banking is getting customers on board. A recent YouGov report found that close to three-quarters (72%) of UK adults have not heard of Open Banking. Nervousness around sharing data is also a worry, with 77% of participants stating that they would be concerned about sharing their financial data.
So how does Nationwide tackle this issue? “After we launched into Open Banking we absolutely focused on the education with our members. We took a lot of time to create information to explain exactly what this meant for customers.
“Nationwide does involve its members in the testing of our programme. We’ve got members involved to ensure that we are focusing on what they really value. The aggregation side is an important thing; customers do think it’s great that they can see all of their accounts, but it still needs to be brought to life. We are looking to launch fully next year,” Sinclair says, adding: “That will be a way of opening up and using those APIs more and more.”
Branch network
As much as consumers across the UK are shifting towards digital banking, Nationwide fully believes in the value of its physical branch network. Transparency, connectivity and support are at the heart of the new Nationwide branch designs.
Rather than transactions, Nationwide branch employees increasingly focus on advice. The new designs aim to bring staff to the forefront by removing the old physical barriers of closed counters and providing more open spaces.
Speaking about consumer behaviour and Nationwide’s branch transformation strategy, Sinclair says:
“We are committed to our branch network; that’s not because we are not seeing what other financial institutions are seeing, but it’s about having those other conversations that people want to have in branch. Actually, members do come in to have conversations about Open Banking. There are still services, like getting a mortgage, that customers feel more secure in coming and having a conversation with an actual person.
“There are digital solutions within the branches, but it is about evolving them and creating what’s really meaningful to our members today. We have a completely new branch design and I really stand behind them. I think we have nailed the branch format, that is really warm and welcoming. It would absolutely not be in our interest to remove branches from our members.”
Sinclair highlights that while there are definitely significant growths in mobile adoption and digital payments, many customers still prefer both the physical and digital channels. For bigger financial decisions, Nationwide wants to be able to provide support in whatever manner the customer wants. Sinclair adds that members want a combination of human service on the high street, as well as digital convenience.
Open Banking has raised the bar for banks. With fintechs flooding in with innovative digital offerings, everyone needs to rethink their customer-engagement strategies. Sinclair concludes that 2019 will be the year of delivering what Nationwide has committed to, and always providing services that are meaningful and value-adding to its customers.
The potential for Open Banking to bring about positive social change is significant and should be fully embraced.
