This is a first for us in the UK, but what is it – and what does it mean?
Here’s the answer, in the words of Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity (the ‘OBIE’):
“The goal of the UK’s Open Banking initiative is to allow consumers and small businesses the option to securely and safely make the most of their financial data. In time, Open Banking will give consumers and small businesses more choice, better services and cheaper products.
The UK is the first nation to implement a standardised Open Banking solution. In the UK we are creating a single technology standard enabling new services to be easily built and offered to consumers and small businesses. Open Banking will help make Britain one of the best places in the world to bank and will, in time, stimulate the digital economy.”
Very exciting, and all good news right?
Well, yes if you are a consumer (and they do this in a manner that doesn’t expose us to new threat levels of hacking/data theft etc.), but spare a thought for digital employee benefits providers.
Such operators tend to be third party providers to employers in the UK and abroad, and this innovation could be just the sort of market disruption that sees these companies become the Blockbusters of the future.
And while we don’t yet know who the Netflixs in this case may be (if you recall, Blockbuster declined to buy Netflix in 2000 when they offered to sell, sealing their decline and ultimate demise), I have to say that I really have not seen much new in the employee benefits platform sector for quite a while.
It’s all a bit old hat, and that is why I think the advent of Open Banking might do one of two things, either:
Cut out the middle-man, so to speak, by putting service and product providers directly in touch with consumer spending habits for targeted discounting and offers, by-passing employers and their partners
Alternatively, the employee benefit providers may have to up their game to continue to encourage employees to use employer-packages, which let’s face it, don’t and can never fully target spousal/household needs and spending patterns for selecting benefits
Preparing for the scale and pace of change
Looking a little further into the future, it’s worth thinking about how widely this could change. Digitally disrupted markets grow and change very rapidly (think eBay, Uber, Amazon etc.), and it’s not just the service providers themselves that have to keep up.
Employers need to think ahead of these changes too, because these offerings are all part of encouraging employees to join and stay loyal.
Innovation comes from understanding the market, and I would encourage any employer to conduct employee surveys regularly and ask questions about what benefits would make a difference.
I would also encourage employers to think way outside the box, as this is what will essentially make or break the market in the future.
For example, as things stand benefit selection and choice is very regimented.
Typically, employees get the chance to pick from a limited number of options once a year, which they are then locked into.
For example, could you envision offering something innovative like an app that could accommodate flexible (even, near-instantaneous?) salary advances – providing a clear benefit to employees by helping them swerve the need for pay-day loans and emergency overdrafts?
Is such a thing far-fetched? In a world with self-landing rockets, driverless cars and digital assistants making their way into the nation’s living rooms, I think not.
But whatever the future holds, finding out what your employees want – and demanding that from benefits providers – is one clear way to keep your employer brand at the top of the market.
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Over 20 years Lisa has acted as a consultant and adviser on many HR issues and employment tribunals across public, private and third sector organisations. She has worked in most UK local authority areas on projects ranging from social care and health to training and conciliation arrangements. Lisa studied psychology before moving into employment law and HR after further study at Manchester Metropolitan University and the University of Salford, and she is also qualified in project management and counselling.