In the new economy, the endgame for financial services is becoming clearer. Accessibility will be the norm, the app store is the new high street and the financial app the vehicle that will deliver a financial future in which Open Banking will become the norm for all.
‘Changing consumer habits’ are both a demand for change, and a result of its side effects. On the one hand, RBS’ closure of 167 branches leaves business and personal users estranged from the high street, while on the other Santander’s announcement of a digital hub designed for SMEs is a welcome sign of inclusivity for a traditionally excluded financial audience.
At the heart of the shake out, tech is taken for granted. Across society as a whole, financial apps are the agents of change that have fostered social mobility. Those who never had a bank account, can have a finance app. Everybody sits on a newly levelled playing field, in similar reach of a remarkable, unprecedented, financial enabler with which to gain a measure of control.
For the rich and for the poor, finance apps are underpinning a growing gig workforce, in every sector, among the banked and the unbanked, in which the contract worker, part timer and freelancer now contribute £119bn to the UK economy, up £10bn from 2016. We are witnessing a surge in the growth of OMBs, one man (and woman) bands, entrepreneurs at the heart of the UK’s evolving industrial strategy, who are using fintech to leapfrog traditional finance and boost their businesses. In just over a year, our invoicing and expenses app has attracted thousands of users in 35 professional sectors, from ironing clothes to industrial design, photography to architecture.
The financial app is no longer a futuristic ambition. It is a great social leveller because anyone can download it. It caters to the Uber driver who never had a job or a bank account to the techie who turned to contracting after a profitable in house career. It provides a positive experience. Apps sit in an app store that is 100 focused on customer need and positive feedback. The more productive, helpful and fuss free the better its chances in a democratised market. It applies not just to the consumer, but to the business professional, not just in a B2C banking environment, but in one designed to enable entrepreneurism. It gives everyone a new measure of control. Open Banking could not realistically fulfill its promise without the financial app.
The financial app also meets the political mood, the urge for serious competition, and the needs of a Competition Markets Authority in search of innovation. The app is the enabler for new business models, new challenger banks and entrants like Paypal and Amazon who are collectively breathing down banks’ necks, helping to nudge new thinking and promising to democratise finance for all.
So far, discussions about the role of the app in hastening the advent of open banking have focused on the consumer. Opinions on the role of the app in a B2B environment are harder to find. For a consumer, the chance to save £50 or benefit from an Amazon voucher on an aggregated site might be all it takes. For a self employed freelancer, the chance to save important hours every month in administration, reconciliation and bookkeeping, is far more valuable.
Business and consumer app users have both come to regard the phone as a payment device. Now businesses want a collective of aggregated services designed just for them, with data sharing models extended across the B2B universe just as they are today on confused.com and compare the market.
Those days cannot be far away. Standard APIs already enable far more than bank reconciliation and transactions. The financial app can bring open banking to life by enabling instant, informed, competitive access to capital, faster and cheaper connectivity with accountants and HMRC, new AI powered tools and assistants and alerts that draw the account holders’ attention to problems, all from a single cloud based technology.
In all the key constituencies of the open banking wor;d, it is financial apps that are reshaping the debate by asking all the right questions, from consents, to the demands for uniform regulation and the processes through which organisations can legally make requests from their banks. Powered by positive reviews, the Appstore on which these apps live is the modern high street, accessible to all and attracting footfall and reviews from millions of passers by.
Even in the most transparent financial setting, some behaviours will stay the same - apathy for instance. A consumer will still shop around to save £20 on a car insurance but fail to switch a bank account. Among the entrepreneurial one man bands for whom we created our finance app however, I see no such reticence. They want the best deals, real time transactions, instant reconciliation and additional services as quickly as we can deliver them.
From access to a protection portal for ‘key man’ insurance, to the chance to save hundreds of pounds by pre populating data for an accountant, business customers regard open banking and apps as synonymous.
Time is money, and the app is where open banking fulfills its promise of digitisation, seamlessness and transparency, all while monetising time saving. The app store has transformed Apple’s fortunes, just as it will transform the banking, accountancy and aggregation sectors in ways that make them fit for purpose, and future proof, for consumers and freelancers alike, in the rapidly emerging gig economy.