You don’t have to look far to see signs that the financial landscape is changing. From the success of challenger banks such as Monzo and Starling to the rise of alternative currencies like Bitcoin, it’s clear that customers are ready to embrace alternatives to traditional banking. For the most part, financial companies have been quick to respond, considering how they can adapt and offer new services to increasingly savvy customers.
‘Beyond banking’ is a new business model that many experts now think may be the future for financial service providers. It refers to a system in which customers receive a package of related services from a range of different providers – a sort of business ecosystem in which you receive a range of services from multiple different companies, each experts in their own area. This can apply to personal banking or to businesses.
What does this mean in practical terms?
Banks and other financial institutions now have the opportunity to partner with other companies that provide adjacent, relevant services. Let’s take home ownership as an example. Banks are already integral to the process of buying property, as most people will need to get a mortgage in order to buy a home. But at the moment, financial institutions are completely removed from the process of actually finding property and moving into it.
If they were to consider partnering with real estate agents, developers and moving companies, then they would have an opportunity to provide an end-to-end service. This has benefits for the consumer, as it would make the process of moving less of a hassle and potentially offer access to different tools or discounts. And, of course, there would be huge benefits for the bank, as they would now have the opportunity to sell additional services to a captive audience. There is also the potential to make money from partners who may pay for access to the bank’s customer base.
‘Beyond banking’ builds on the success of open banking
The idea of a ‘beyond banking’ system is only possible if the different pieces of technology that you use are able to speak to each other. We’re already seeing this in action with current ‘open banking’ practices, which allows our different banking providers to share data. This has led to customers being able to see details of multiple different bank accounts within one banking app, and to the creation of useful tools like the pensions dashboard, which brings together information about linked financial products from different providers.
Beyond banking takes the same basic principle and extends it beyond the financial sector into other related areas. Many financial analysts have now produced reports in this area, and it seems likely that we will start to see UK banks capitalising on the possibilities within the next few years. We will be very excited to see how this develops, as there is the potential for a range of innovative new services that help make banking and other related services more accessible to the modern consumer.