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Open Data and Open Banking strategies to build customer loyalty

The open circulation of financial information represents a substantial improvement in terms of customer management and transaction performance. So-called open data is essential for establishing strategies applied to open banking and increasing customer loyalty.

Table of Contents

The current state of Open Data

One of the fundamental axis of the technological revolution we are living is the data produced by users. This data is recorded with their activity through the various websites, platforms and applications of a commercial nature.

In the banking sector, the so-called Application Programming Interfaces (APIs) are essential. This makes it possible to standardize financial information and data integration systems under a single scheme: open banking.

In fact, the financial market based on the open data model currently exceeds 7 trillion dollars and it is estimated that its growth will be even greater in the coming years.

According to Accenture, a strategic and technological services consulting firm, it is estimated that by the end of 2022 this value will exceed 310 billion dollars a year.

How Open Data can help me get more customers

One of the main reasons why open data and open banking represent a substantial improvement in the performance of financial services lies in the ability of this activity to win more customers and build customer loyalty.

Personalized service

Indeed, open data as a concept is based on the idea of the circulation of financial information produced by users through their online activity. In this sense, the availability of open banking services makes it possible to get to know the user and offer him personalized financial products and banking services.

At the same time, personal management reduces administrative costs, making the service more economical for the user. This also means the possibility of investing in marketing strategies to attract more customers and develop specific digital onboarding programs.

Process automation

Open data process automation presents a very broad spectrum. The activities in which open banking services make it possible to capture customers overlooked by traditional banking services are:

  • From the day-to-day areas of consumption and personal wealth management
  • to investment options, access to housing and tailor-made financial solution

This represents a quantum leap in the quality of digital financial services. Therefore, a business model based on process automation not only assists decision making and simplifies user management. It also makes it possible to offer rewards and bonuses based on usage and user behavior.

Non-bank third party providers

In order to improve the acquisition of new customers and to improve the levels of permanence with the company, it is essential to have so-called third-party providers through APIs. These companies take advantage of the user’s financial and consumption information. This data is obtained legitimately by customer consent and is offered to other banking and non-banking entities and companies.

There are two types of providers depending on the type of service they provide:

  • On the one hand, the IT Service Provider or AISP. A type of company to which users give authorization to collect and store information that can be used by other businesses or companies to improve their service.
  • On the other hand, the Payment Initiation Service Provider or PISP. They are in charge of executing a transaction on behalf of the user, as it usually happens with an e-wallet or credit card -that is, as intermediaries of the transaction-.
Banco Santander has been a great success thanks to its Santander Piggy Bank

How it benefits both the company and the user

The benefits of open banking are manifold, both for users and for the companies that decide to incorporate this model.

In the first case, let us recall some of the advantages for the user already mentioned:

  • Management
  • Accessibility
  • Cost 
  • The benefits of personalized products and services

For companies, third-party providers offer highly accurate financial information. This provides market knowledge that surpasses any typical market analysis. As a result, the company is better able to adapt to demand, improve its business performance and obtain higher customer retention rates.

The advantages of open finance stem from the flexibility of services and high-performance IT solutions.

On the other hand, they are based on the low cost of data processing in financial services, which makes it possible to have a database without making a major investment.

The development of services and activities based on the idea of open data makes the existence of open banking and the creation of effective strategies possible. This facilitates user loyalty and increases customer retention.

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