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Louise Beaumont on the Open Future

In the year of Open Banking, PSD2 and GDPR, we’ve already seen a vast array of new consumer-focused fintech solutions surface from the world of financial services. Data is key – the crucial currency on which the Open Future depends. The million-dollar question: how can financial services effectively and innovatively leverage consumer data to provide solutions beyond the merely convenient to create something truly revolutionary?

Louise Beaumont, Co-Chair, Open Banking Payments Working Group, techUK, was in attendance at Money 20/20 EU, Amsterdam, with Publicis.Sapient to highlight this very issue, and to lead the discussion on the Open Future at the event.

I was lucky enough to catch her for a moment before she kickstarted her chairing of The Flying Trapeze Stage at the event, presenting a day of talks on the Open Future.

Source

Payment Eye

Publish Date

July 18, 2018

So, you’re chairing The Flying Trapeze Stage today at Money 20/20?

We’re covering the whole thesis behind the Open Future. The logic behind it, of course, is that regulation is an essential part of it – PSD2, Open Banking, GDPR – but these were only necessary as regulatory levers because the big banks and other companies had ignored all of the other drivers to the Open Future. The big banks had ignored consumers attitudes, needs and expectations changing, they had ignored the technology that allows you to drive upwards consumers’ expectations, and they had ignored new competitors coming into the space.

Regulators had a number of concerns – that banks weren’t doing anything to meet the needs of their customers, they’ve got an oligopoly, they’re pretty much lazy, there’s no effort other than optimizing their big dumb product to push, and that the only thing they care about is acquisition, not so much customer retention, because you can just go and merge with the next big bank down the road.

So, countries around the world identified this 80/20 issue – that a small number of big banks, typically four, owned 80% of the customer base. This means there’s no innovation, no diversity of thought, and consumers get screwed.

The answer was clear – regulation, because it’s what banks are perfectly tuned to respond to. They are animals that respond – typically with anaphylactic shock – to compliance. They’ll lobby against it, of course, but ultimately, they’ll work hard to comply.

What’s the upshot of all this?

It gives consumers, as a function of all this regulation, the opportunity to trade their data for services that works, that has value and is pleasurable. Take Uber, for example. You probably didn’t know you had that need, you were probably fine with a bus, black cab, or the tube, but you had this great big underserved need.

It’s always the case, isn’t it? I never thought chip and pin was inefficient, but now I always use contactless.

Exactly, that’s how services work in the Open Future. They are services you never imagined, that you never asked for, but now you can’t live without. The reality is that most humans really don’t have a working imagination. If we ever had one, it was when we were children, and it was kicked out of us by school, or by our colleagues later in life. Most people can only think of the 10x solution – make it 10x faster, 10x bigger – what they can’t usually do is change the thing itself. Banks are optimized to push their big dumb products without consideration for the end consumer, but in a world where consumers own their data, that will no longer be the case.

With Publicis.Sapient you’ve been talking about the concept of a ‘data daisy’. What does that mean?

It’s a nice mnemonic, right? So, right now, your data daisy has one petal, which is your current account, with which you can only really buy personal financial management, which is a poor value exchange. You’re giving up all of the information in your current account just to be told you drink too much coffee. There are gaps and overlaps between your petals, but you don’t know where they are. But when you can add your savings, your mortgage, your insurance, and your pension to that, you can broker between today and tomorrow, or tomorrow and later life. If you’re willing to share your data daisy, we’ll be able to see the bigger picture – how your various needs and habits overlap, and how you can take advantage of that, no more gaps, no more overlaps, just hyper-personalized, pre-emptive services, wrapped around you.

But what about trust?

Right now, trust is about you trusting the bank, but that point of view has the trust telescope the wrong way around. If you’re prepared to share your data with the bank, they should be able to trust you – but they’ve never looked at that data, they’ve hidden it away. They never used it, at least not for your benefit.

Who will be the major players in the Open Future?

We’ve got some interesting competitors in this space: fintechs – largely underfunded, typically point solutions. If you’re a bank you can lace all of these point solutions together, but this does no more than tarmac the goat track, rather then deal with the overlying issue, which is a big dumb product push business model, straight out of the 17th century. I’m not negative about point solutions, but in this case it’s no more than a layer of fintech lip-gloss on the banking porker.

Then you’ve got the data players – the energy, telco, insurance, and pension companies, and so on – who have huge amounts of data that they can bring to bear. If you add each of these petals to your data daisy, leveraging all of their data, there’s a service somewhere in the middle tailored just to you.

This also changes loyalty, from the transactional model of loyalty based around a points card to providing services that are pleasurable, so that you’ll use them again.

How will those major players ultimately succeed?

Brand is crucial here, particularly a brand’s elasticity. If your brand can stretch to service more people in more ways – you’re called Amazon. Try that with Barclays, for example – it just doesn’t stretch. You might have a portfolio of brands, which is what Facebook are doing.

Talking and listening is important too – being able to communicate with your customers, one-to-one, at scale. This is why echo technology is such a focal point at the moment – it means I can talk to Amazon, for example, and Amazon listens and responds.

Then you’ve got the ecosystem – how you design your services, and how you deliver those services. A bank isn’t going to design hyper-personalized, predictive and pre-emptive services on their own, which is where the fintechs come in.

This is where data science will be combined with data artistry. You need the sociologists who understand people, the semioticians who understand how meaning is created and conveyed, the ethnographers who understand cultures and how they work, and then the ethicists who can tell you what’s okay.

Executive teams are exclusively made up of people who studied banking, accounting, finance and law. This is a shallow gene pool with an aversion to risk. Compare that to Amazon, where you’ve got a wide diversity of background and education, inventing and continuing to invest, at scale, in the world we live in. The big banks are perfectly adapted to the past. The tech titans are perfectly adapted to the future they’re building for us.