Billed as a trailblazer designed to level the playing field for consumers and companies, Open Banking when it launched promised only good things to consumers and businesses. Consumers would be able to see all of their money in one place, to budget and manage their finances more easily and shop around for different products and services. For businesses, it was touted as the key to generating stronger customer insights and increasing competition, innovation and developing more consumer-centric products. Not to mention the time-saving aspects of data processing and setting-up new customers more quickly. But as Open Banking enters toddlerhood, turning one and half this month, it continues to pose challenges, especially for more established players.

With the financial services industry still grappling with a legacy of complicated back-end systems, out-dated platforms and complex processes, the technology has been integrated with mixed success across the big banks. And while Open Banking estimates that consumers could make a collective gain of £18bn[1] by embracing the technology, many consumers (typically those who are older) are sceptical of sharing quite so much financial information with the big banks.

That said, some high street banks have made good strides towards offering better flexibility and sophisticated digital solutions for customers who have embraced the changes. The catch for all is that solutions need to cater generationally to multiple sets of expectations and financial needs. Younger customers entering the personal finance market with a keen interest in spending, saving and budgeting than older generations have drastically different expectations. A 2019 study from PwC[2] highlights the ongoing gap for the financial services industry in how it is addressing the needs of younger customers, with more to do in developing digital services, and building trust via word of mouth. High street providers have focused their Open Banking efforts so far largely on simple banking apps which go some way in addressing consumer demand for more flexibility and higher security. But in reality, these changes are a toe-dip in the water compared to what the younger, more nimble fin-tech players in the market are undertaking.

Not only has Open Banking allowed fin-techs to optimise their current products, it has triggered the birth of new services – many of which have almost gamified the personal finance world. Particularly popular among the millennial audience, these span budgeting solutions built on artificial intelligence and algorithms; investment platforms through which stocks can be bought and sold in just a few swipes; and a whole raft of different tools designed to zoom into the minutiae of our personal finances, for anything from building a credit score to buying now and paying later. When it comes to money, it’s never been truer to say: “There’s an app for that.”

These new services are smartphone essentials and shaping the way that we all behave, spend, and save. A study in the US revealed that over one third of millennials in the US have at least one budgeting app on their phone, compared to just 15% between those aged 35-54[3]. And in the UK, more than half (55%) of 18-36 year-olds say they rely heavily on financial apps compared to just 18% who value bricks and mortar branches. These developments, emerging from an increasingly blurry melting pot of finance and technology companies, have been expedited by Open Banking and have only gained momentum as consumer demand has emerged. And with the lines between consumer credit, current accounts, savings, investments and budgeting tools becoming ever more blurred – there are only going to be more advantages for the businesses who can be more agile in catering to an audience which demands flexibility.

The problem will be to ensure older consumers are not left behind and to strike the right balance for those who prefer bricks and mortar banking to the shinier, newer technology behind Open Banking and digitisation. COVID-19 has already compounded some of these changes: forcing businesses to respond to consumer need for new systems and services they’d never have previously thought feasible nor realistic to roll-out in the shortest of time frames.

While Open Banking is just 18 months old, if there’s one lesson we’re learning right now it’s that change and time are perhaps not as inextricably linked as we first thought. Financial services players everywhere are moving at pace, in tandem with technology, to meet the increased expectation and demand from customers. And now that we have all had a taste of the benefits, we can only assume it is a question of when Open Banking will increase in its power and potency – not how.

What makes H+K ‘appy? We asked our team to share some of their Open Banking favourites: 

Jasper: Money Dashboard helps my keep track of all of my accounts, savings pots and mortgage in one place and gives me an insight on overall spending habits. The great thing is I can also add “offline accounts” that do not currently sync with open banking so I can truly see where all my money is, at a glance.

Sophie: Monzo – because I can easily flick between my personal and joint account. The app also makes it clear when pending payments are due to come out, for example, it shows me that my energy bill is due to be paid in 3 days’ time so I can make sure there is enough money in the account etc.

Nick: Moneybox to save into a stocks and shares ISA – I love the proactive push and rounding up mechanisms based on my day to spending.

Hannah: I really like Revolut for a couple of reasons. They offer rewards which are based on your recent purchases so they’re usually relevant. The balance updates instantly so you know how much money you have in real-time. And they don’t send me a million email updates. I only ever get notifications when it’s really important, which I prefer.

Michael: I use an app called DollarBird to track all of my non-essential spending, i.e. excluding rent, travel and utilities. DollarBird is nothing fancy, I just stick in my transactions when they happen and apply custom categories. I usually keep my Google Wallet push notifications on my phone as a reminder to add them in at the end of the day (or big night out). The categories allow me to see how much I’m spending on average on things like groceries, eating out and other fun stuff. I’ve got a weekly spending allowance which updates each Monday, so as long as I’m in the positive I know I’m not overspending.