In 1968, John Lennon penned The Beatles classic “Revolution” in response to the Vietnam War. The song opens with the memorable lines:

“You say you want a revolution,
Well, you know,
We all want to change the world”

Last week’s CMA announcement, bringing to an end a 2-year £5m investigation, introducing “Open Banking” certainly feels like they want to change the Current Account world!

‘Open Banking’ implementation will mean an acceleration of technological change within the market which will “enable personal customers and small businesses to share their data securely with other banks and with third parties, enabling them to manage their accounts with multiple providers through a single digital app”!

What this means is that Personal and Small Business Current Account customers should be able to access all the same services they might expect from a branch to be made available via a smartphone application – As Lennon’s wife, Yoko Ono, later described “ … what he means is that there’s too much repercussion in the usual form of revolution. He preferred evolution”.

Certainly, the new Open Banking plan seems to be more of an evolution than a revolution! A recent report from the British Banking Association (BBA) suggests that internet banking log-ins are in decline while those from mobile devices are climbing – maybe, like myself, the increased convenience of accessing our finances via mobile phone is so much more effortless than it is accessing via a PC or laptop (fingerprint recognition is so much easier than jumping through multiple hoops). A copy of the BBA report can be found here.

“You say you got a real solution”

The CMA have put forward a comprehensive solution to what they consider requirement in order for reform in the Current Account market to take place. These remedies take the form of either ‘Orders’ or ‘Undertakings’ and have an associated time implementation expectancy. The table below lists the core remedies detailed by the CMA:

*Full details of the the Orders and Undertakings, and the associated recommendations to be taken forward by HMT, FCA and BEIS to support them, can be found in the Final Report (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/544567/overview-of-the-banking-retail-market.pdf)
**Subject to de minimis threshold

“You ask me for a contribution”

The CMA will also look for banks to contribute to this Current Account reform by:

• Publishing trustworthy and objective information on Quality of Service on their websites and in their branches so as to allow customers to see how their bank compares against the competition. This publication will allow share Personal or Small Business customers “likelihood to recommend their bank to friends, family and colleagues?” scores – while the CMA see this as a particularly core metric but will also require banks to publish and make available (through Open Banking) other quality metrics.
• Sending out appropriate periodic and event-based ‘prompts’, e.g. announcement of local branch closure, increase in account charges, customer reminders to review their account (and switch if not). These ‘prompts’ are driven by the fact that, unlike insurance products, current accounts don’t have annual renewal dates – the ‘prompts’ will act as natural reminders for customers to review what they are getting from their bank.

Of course, the CMA investigation into the Current Account market has not been without challenge … and this might also be the case with the remedies listed above. At a time when consumer fears of security risk are high (Request your FREE copy of Harris Interactive’s SmartLife report here: http://harris-interactive.co.uk/resources/reports/harris-smartlife/), banks may believe that such technological reforms being forced on their customers might be counterintuitive or even detrimental. Of course, any technology change will require investment, but banks may also be considering what this means for their branch networks, the staff within and the customers it serves.

Revolution or evolution, it looks like the Current Account landscape will change dramatically over the coming months and years, with Open Banking at the core of this reform. As in any industry, change can bring uncertainty, even fear …

but as John Lennon highlighted in 1968:

“Don’t you know it’s gonna be alright,
Alright, alright.”

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Scott Davidson is Research Director within Harris Interactive’s Financial Services team. Prior to returning to agency life, Scott worked as Research Manager for retail banks for circa 10 years. He also spent almost several years working for Capita’s specialist Complaints & Remediation unit, supporting banks with customer redress programmes. To understand how Harris can support you in obtaining and “publishing trustworthy and objective information” relating to Quality of Service, as well as other independent research (e.g. Complaints Satisfaction / Experience), please feel free to contact Scott for an informal ‘no obligations’ chat.