The needs and expectations of consumers in finance are constantly evolving and adapting. Open Banking has brought relevance to everyday consumers' lives and changed expectations around what banking should be: easy, convenient, and accessible.
Open Banking has begun to change the way we interact with money altogether and brought forward great opportunities for new players within finance. Money management app Moneyhub are champions of Open Finance. Their platform enables consumers to own and control their data at all times. Klarna and Monzo are other examples of platforms utilising Open Banking regulations to 'make their products more useful, give consumers greater choice, and encourage the big banks to do better'.
However, the level of innovation and adaptation we have seen in Open Banking has yet to be mirrored by other parts of the financial industry. Take the pensions and investment sector, for example. They do have a reputation for being somewhat archaic and slow to modernize. And it's no exaggeration to say that consumers assume the worst about this sector. This may be due, in part, to embedded preconceptions that investing belongs to financiers and members of 'old boys clubs'. But we would argue that this is primarily due to a lack of understanding thanks to the opacity of the sector.
Our user tests show a consistent lack of basic comprehension when it comes to investment:
"I do not understand why there is so many companies in my pension. I don't know if that is quite normal." - User, Pension Comprehension Test, Sept 2020
Large investment providers must proactively engage with consumers to keep up with market competitors like Nutmeg or Moneybox. These scaling FinTechs are tearing down the barriers erected by years of financial jargon and miscommunication. They are getting close to their users and - in doing so - bringing their users closer to their own finances. Rather than managing their money - which our research suggests many users take for granted - the value these platforms provide is closeness and control. This may be the investment sector, it may feel different to you or me, but the consumer's expectations have been set by the new world of banking, where information about their own finances is at their fingertips - not stuck behind logins with passwords they can't remember!
Transparency, control and a stronger, purposeful brand will become just as key in investment as it is in banking today. Given the millions of consumers relying on these services, it is paramount that a better relationship is established between the investment and pension behemoths of this world and their customers.
Here's a user quote - from the pensions world - where a user has been shown what companies are inside their pension fund for the first time:
"The transparency is making me more interested in my pension. I don't know much about it all. I know I pay into [my pension] each month and by the end I might have some to play with." - Tumelo User, July 2020
So much value will be derived from the depth of that relationship once it is created: from greater levels of contributions (increased AUM) to richer data sets (for enhanced, targeted, personalised product development). But the investment space must put the effort in and must not worry about what consumers will do once they are given more control. Transparency is not a Pandora's Box, as many think it is. It is an avenue to greater connection, enthusiasm, insights, gratitude and loyalty from your own customers and - just like Open Banking - it will be essential for you to provide services and to allow you not just to compete for consumers but to win them.
“I’d switch provider if they did something like this… I want a provider that makes me feel so in control and part of something." - Tumelo User, March User Testing, 2020