The future of connected banking

Imagine a scenario where you can view all your financial products from a single application. So for instance, your current account, savings account, mortgage and credit cards are all in one place. Maybe you think your bank already provides that? After all, you probably already have a banking app on your phone.

But now imagine that all of those services were from different providers. Connected seamlessly, you could swap out one product for another without changing how you view your finances. So if Bank A suddenly puts on a great savings account, you could switch to it without affecting your banking in general.

Take this one step further, let’s assume that not everyone wants to go hunting around for each product (seems a fair assumption, it’s pretty laborious). Instead, you might trust someone, let’s say MoneySavingExpert for argument’s sake, to curate the best set of products specifically for you. Their advice would be informed by your situation, and you could trust them that changing products would be worthwhile.

With the changes to banking regulations due at the end of this year for some, I feel that this scenario is much closer than it’s ever been.

Plug and play banking

Last July, Mark Hicks wrote a piece on how open banking will change everything. Less than a year later and Starling Bank have launched the first PSD2-ready API. Beginning the journey for this scenario to become a reality.

Starling are a digital-only challenger bank, and unlike nine of Europe’s biggest banks, they aren’t required to launch these APIs for another 18 months. With their technology built from the ground up, and one of their main principles focusing on people having healthier financial lifestyles it’s evident that this isn’t just a regulatory change but a welcome one.

Because of their ability to move quickly, Starling are making use of other people’s services to deliver better experiences for their customers - whether it’s joining forces with Transferwise for foreign exchanges, or working with Moneybox for savings - they’re running a plug and play model for banking.

Choosing your own products

The next step in this journey is the ability for customers to choose their own savings product, their own foreign exchange service,their own credit card, and tie them together - either through third parties, or potentially with their current account holder. This would create services that can talk with each other in new ways and starting giving people financial freedom whilst lowering the effort involved.

For me, the really interesting step will be the scenario I described at the beginning - where it stops being the customers or banks choosing which are the best products to plug together, but giving this power to third parties. A world where MoneySavingExpert can create the best financial package for your situation, and give you a single place to view them.

This does open up the question of trust and what happens when things don’t go right - who is to blame? How fluid can this system truly be? I think the opportunities for a better customer experience are clear, and it’s going to be a very interesting journey to get there.