As more and more pension schemes and providers are connecting to the dashboard data ‘ecosystem’, Ellie Duncan – author of Open Banking and Financial Inclusion – explores the lessons the pensions industry can take from the technology revolution in UK banking.
Open banking has been live in the UK since 13 January 2018, when the country’s nine largest current account providers had to be ready to enable consumers to consent to share their current account data securely with other third-party providers.
Following a retail banking market investigation by the Competition and Markets Authority, the incumbent banks were mandated to open up their customers’ data as a way to stimulate competition.
On the face of it, pensions dashboards have little in common with open banking – after all, consumers have very different relationships with their banking data versus their pensions data.
However, once the first pensions dashboard is live, what the two government-backed schemes will share is that they place financial data firmly in the hands of the consumer, for them to make more informed decisions about their finances, now and in the future.
Compliance challenge or customer service opportunity – or both?
The implementation of open banking was not without its challenges, some of which can provide important lessons for the pensions industry.
“There are some similarities and definitely some lessons we can learn from how open banking worked and how it was introduced.”
Chris Curry, Pensions Dashboards Programme
One of these is that many of the banks initially approached open banking as a compliance exercise, as opposed to an opportunity to better serve existing and new customers.
There were also concerns that the incumbent banks would lose their customers to other financial institutions, which later proved unfounded.
Martin Freeman, director at Pensio, said there is a “change in mindset” required by pension providers as they prepare for the first dashboards to go live.
“The biggest lesson is you have to play nicely with other people and you can’t think you’re the only person [pension scheme] in your customer’s life,” said Freeman.
He added that the “job” of pension providers is to “look after the money in accumulation”, and then collaborate with other providers to help their customers “spend their retirement in the best way”, rather than “dominate” the relationship.
Iteration and collaboration, not ‘one and done’
With a two-year testing period for the government-backed MoneyHelper Pensions Dashboard under way, an official launch date for the first dashboard remains unclear.
Freeman said another lesson to be learned from how open banking was implemented is to “iterate”, rather than to wait for perfection to launch.
“Don’t think your first go has to anticipate every single issue, every problem, and every need, because you’ll never do anything,” he added.
It is a sentiment that Chris Curry, principal of the Pensions Dashboards Programme at the Money and Pensions Service, shares.
“As big financial services data and technology projects, there are some similarities and definitely some lessons we can learn from how open banking worked and how it was introduced,” said Curry.
“One of the key features is about iterating and improving. We know open banking has changed and developed over time.”
“If you can work out how to share transactional, real-time banking data, then sharing static pensions data, which is not that detailed, is not rocket science.”
Dan Scholey, Moneyhub
“Another important lesson is about collaboration,” Curry added. “We have been collaborating very closely with the industry, certainly in terms of connecting the industry to the dashboard architecture that we’ve developed.
“It’s also important for us in maintaining that collaboration when we’re helping MoneyHelper develop the first pensions dashboard.”
Lessons learned, and to be learned
For Dan Scholey, chief commercial officer at fintech Moneyhub, one of the biggest “frustrations” is that the lessons from open banking have not been learned, citing timelines as an example.
Scholey said “it was very clear” banks had to be ready to enable data sharing under open banking by January 2018, compared to the development of pensions dashboards, which has “been going on for years”.
“When we did open banking, that was pioneering; no one else in the world had done it quite like it to that level of quality,” Scholey added.
“My key takeaway is, if you can work out how to share transactional, real-time banking data, then sharing static pensions data, which is not that detailed, is not rocket science.”
Ellie Duncan is a freelance journalist and author of ‘Open Banking and Financial Inclusion: Creating a Financial System That Provides Security and Equity’.
