How Open Banking can improve customer engagement in the public sector

How Open Banking can improve customer engagement in the public sector

With over six million UK users, it’s safe to say that open banking is no longer in its infancy, but how can we use it to improve customer service?

Open banking is invaluable for facilitating fast and convenient connections between banks, third parties, and technical providers, yet its full potential is still yet to be realised. Open banking has become one of the biggest talking points in the finance and technology industries. In fact, recent research from Research and Markets suggests that the worldwide open banking industry will reach $135 billion by 2030, a 30% increase from 2022.

Despite this significant investment in open banking, there is a noticeable gap in its uptake between the private and public sectors. To bridge this gap, it’s important to understand the many ways in which the public sector can benefit from open banking solutions: starting with customer experience.

Ensuring accessibility for customers

Rather than seeing the in-depth processes behind their banking experiences, customers’ understanding of how their finances are processed is based on how this is communicated to them. The financial sector is notoriously heavy on jargon, and this leads to limited knowledge and understanding, with users often ending up feeling alienated as language is unfamiliar and therefore becomes difficult to apply to an individual’s real-life, every day, financial situation. This becomes a more pressing issue when it comes to the public sector, as customers are using the service out of necessity rather than based on a commercial choice.

Open banking is designed to simplify banking processes for users, allowing them to seamlessly share their bank and credit card transaction data with third-party service providers to fulfil applications and services far easier and quicker. This negates the need to source the details for every application individually. As such, it makes sense to ensure that this simplicity is properly conveyed to customers through simplified language and ease of use.

In addition to this, the cost of living naturally increases financial worries, meaning that customers are paying closer attention than ever to how they manage their money. In fact, research has found that more people are reporting concerns about their finances now than during the pandemic. Whereas 36% of people noted money worries during the pandemic, this figure has skyrocketed to 63% during the cost of living crisis. This makes it even more important to ensure that public sector payments are as smooth as possible to alleviate additional stresses caused by inefficient and excessively complicated interfaces.

Enhancing efficiency in councils

Public sector organisations deal with many customers across a wide range of services, such as housing associations and local councils. In doing so, they are tasked with supporting some of the most vulnerable sectors in society. This involves considerable challenges, with efficiency being a key area to improve upon.

It’s no secret that when it comes to applying for payments, there are traditionally many hoops to jump through, from sourcing a large amount of financial information required to fill out a form right up to lengthy and complicated onboarding processes. Open banking is designed to mitigate this, simplifying the process by removing as many administrative obstacles as possible.

One of the ways this is achieved is through using biometric logins and authentication to considerably reduce the time taken to login and gain access to accounts. These processes will be familiar to many users, as mobile banking and other secure mobile functions are increasingly able to deliver speed and ease of use without compromising on security. This is a vital step in driving customer engagement, as open banking circumvents the friction and annoyances associated with processes that are not designed with user experience at their core.

Unfortunately, many customers have had frustrating banking experiences, which have inevitably shaped their attitudes and left them dreading labour-intensive and time-consuming processes. Open banking, on the other hand, is providing a path away from this. An increased authentication speed is one of the key driving forces behind this. Open banking is based on API technology and regulated by Payment Services Directive Two (PSD2), meaning it is subject to a requirement for multi-factor authentication for all remote payments.

Importantly, tight security measures don’t cost time. This technology utilises a single sign-on mechanism, along with Identity and Access Management (IAM) to make sure that customers can access their accounts and authenticate their payments in one quick step. This is usually achieved by entering a code sent via text or by confirming the purchase through the mobile banking app.

Support and security in the public sector

It’s important not to lose sight of the public sector customer’s specific needs, which means making sure that customers have access to the support they need. While open banking offers a simplified process, digital banking can still be a learning curve for many people. This is particularly true of public sector customers, as socially and economically-vulnerable customers are far more likely to face difficulty, both in accessing digital services and in using them.

Today, 3.7 billion people worldwide are ‘digitally excluded’, meaning they lack the resources and skills needed to access digital services. However, when it comes to sharing sensitive data, it can be difficult to strike a balance between providing customer service support while also maintaining security compliance.

Given that open banking is a streamlined process designed to simplify the customer experience, customers already benefit from a simplified journey which removes many of the frictions involved in more traditional banking. Biometric logins allow customers to login fewer times and ensure data is securely stored with their bank only.

However, when difficulties do arise, it’s important to make sure that customers aren’t left without support. For vulnerable customers, in particular, human interaction can make a world of difference when it comes to transitioning to digital banking. This is why contact centre agents remain accessible to support the process as customers require, but crucially, sensitive personal data is automatically securely transferred without exposure to the support agent.

It’s expected that by 2023 60% of the UK population will be using open banking, so it’s imperative that we ensure that all sectors of society are supported in making this shift. The private sector is already a few steps ahead in the uptake of open banking, but with its many public sector applications becoming clearer, it’s essential that organisations act now to bring this to reality.


This piece was written and provided by Stephen Ferry, Managing Director at Pay360.

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