The economic instability of recent years showed few real signs of stabilisation in the opening months of 2023. Both businesses and individuals have been feeling the bite. With cost of living, inflation and interest rates soaring, crypto markets in crisis and the share prices of companies like Google and Meta plummeting, it is fair to say the industry has been navigating choppy water.
Of course, none of these factors are going to resolve themselves overnight and the UK and global economies have more difficult months ahead. Here, though, we will zero in on three of the major factors that financial service businesses will need to take into account over the second half of 2023.
Open ecosystems opening up new opportunities
Since the regulations came into force in 2018, open banking ecosystems have become increasingly prominent, bringing with them new value chains, increased collaboration and whole new business models.
Open finance regulation is the next step in the open banking journey, and regulation is expected to come into force later this year.
It will bring the full spectrum of financial services companies into the scope of data sharing requirements, across such niches as mortgages, personal credit, pensions and so on. This will certainly stimulate more data sharing across the ecosystem. It will play into the hands of those fast-moving challenger brands who are quickest to use the new data to anticipate customer needs and make more personalised product offerings.
Information is power for competitive advantage
Our reliance on data in what is, after all, the information age grows with every passing year.
Transforming raw data into strategic insights is a core way for financial service businesses to get a step ahead of the competition.
These insights help to unlock a clearer and more nuanced understanding of customers and the environments in which they operate.
Let’s look at banking for an example. 93 percent of global banking consumers want products and services that are personally tailored to their needs. Only 33 percent say their bank delivers on this. Similar examples abound in insurance, investments and other financial services.
Building trust fosters closer partnerships
From the cost of living to the growing risk of cyber attacks, there is plenty for customers to worry about in 2023. It’s no surprise that many have adopted a siege mentality, especially when these issues follow so close on the heels of the pandemic.
Prioritising financial services initiatives that foster trust is more important than ever right now.
Any initiatives that are clearly and transparently crafted to help customers through the crisis will go a long way to establishing trust. These might include the “get paid early” schemes that various neobanks have been promoting in recent months or insurance automation initiatives that accelerate claim processing and allow faster pay outs.
Navigating hard times
The financial services environment is a tough place to operate in 2023. There are signs of stabilisation and recovery on the horizon, but it will be another year at least until these become noticeable to most consumers. In the meantime, financial service providers need to remain close to their customers and leverage every advantage they can from tech innovation and analytics to help them to do so.