First Direct makes it personal with open banking

The digital bank aims to use consumers’ own data to help them find the best deals - even from rivals


Hand on a tablet. Source: Getty Images

By Leo King

Increasing transparency is the fundamental aim of open banking, with the expectation that freeing up personal financial data will lead to a better choice of services.

First Direct is aiming to be at the forefront of the changes as banks attempt to demonstrate they can be trusted not to simply promote their own products, but to actively help consumers in search of the best possible deals from any company.

Joe Gordon, head of HSBC’s First Direct
Joe Gordon of First Direct: The pilot project is more about education than pushing products

“Our strategy is to be the most personal and relevant business for consumers,” explains Joe Gordon, head of First Direct. “We want to ensure that we are tailoring our communications, our discussions and the services we provide in the most relevant ways possible.”

First Direct is working with Bud, a fintech business, to pilot a new model that provides customers with a selection of financial services products and tools from across the market, including those from other providers where most appropriate.

“It’s not a case of saying ‘here is the product for you’. It is more about saying ‘here is a product that you might want to find out a little bit more about’ or ‘here are some providers of services that we think could be beneficial to you’,” explains Mr Gordon. “The role of this pilot is really about education and pointing people in the right direction as opposed to pushing specific products.”

The trial forms part of the open banking strategy of parent HSBC UK and the hope is that this collaboration, and a more general engagement with open banking developments, will lead to a build-up of trust between banks and consumers even if they don’t ever become customers in the traditional sense.

“We’ve got great products and customer service, but our customers are well aware that there are actually other products and services out there that also meet their needs,” Mr Gordon explains. “We wanted to see how we could add value, by continuing to offer great services to our customers but allowing them to find all the products and services they want in one place.”

This idea is the “key to open banking”, he says, and the increased transparency opens up the door for customers to find tailored financial solutions much more easily.

Traditional comparison websites have based their recommendations to customers on the basis of less detailed information and highlighting the lowest headline rates, Mr Gordon notes. Apps such as in this pilot though, can use open banking to take much more personalised financial information and offer access to tailor-made options.

“As an example, a loan applicant might be a contractor and value payment flexibility much more than someone else – using Bud means that we can discover that and offer more appropriate options,” he explains.

The wheels are now in motion for First Direct to provide services via Bud in the early part of 2018, with further tweaks expected as consumers get to grips with the new array of tools powered by open access to their data. First Direct aims to inform, educate and gain the trust of users, as it learns about their needs.

“Through the partnership with Bud we are probably, I think it’s fair to say, the largest financial institution really trying to take this aspect of open banking somewhere,” Mr Gordon concludes. “We’re testing an open banking service that will really help customers get a personalised, better deal quickly.”

Leo King is a writer and editor. He works with the Financial Times, The Sunday Times, Bloomberg, Forbes, The Economist and The Daily Telegraph.

These services are available on bud, an app that brings together over 60 major financial services onto one marketplace.

Learn how banks, fintechs and you can own the future of money. Thisisbud.com/thetimes