How retailers can prepare for the new digital upheaval

Not everything that goes up has to come down. The pandemic saw a surge in online shopping, with Office for National Statistics figures revealing that average weekly online spend in the UK rose from £1.52bn to £2.47bn between February and June. And those habits are sticking. 

A recent survey by consultancy Retail Economics found that almost half of consumers said their shopping habits will change permanently due to the crisis. Many retailers, Retail Economics said, were “scrambling” to adapt.

It’s arguably the online retail pioneers, such as Amazon, that have had the greatest impact in changing customer expectations over the last decade

Of course, many are already well advanced in their digital journeys.

In fact, it’s arguably the online retail pioneers, such as Amazon, that have had the greatest impact in changing customer expectations over the last decade, putting pressure on sectors such as financial services to adapt. 

Changing customer demands, as well as a desire to reduce the number of costly high street branches, saw many financial services businesses ramp up their online offering in recent years. 

As customers started to demand fully digitalised, personalised experiences, third-party providers such as Yolt were able to deliver a new online experience giving users access to and management of all their financial affairs on the go, 24/7. 

Now, as retailers face a new digital upheaval, they should draw on this experience. In particular, they can take advantage of the technology that has played a key role in transforming the financial services experience online: open banking. 

Open to change

Open banking allows customers to use apps such as Yolt and Money Dashboard to access and view all their bank accounts in one place using account information services (AIS). 

It also enables companies to develop data enrichment services (DES) using that information to provide customers with intelligence on their spending patterns.

And it even allows people to securely pay for goods and services directly from their accounts, using payment initiations services (PIS). 

Open banking could also help retailers meet changing customer expectations.

It’s in payments where technology could have the most transformative impact on how the customers of today are served  

AIS and DES, for instance, could help when it comes to offering credit by using analysis of customers’ income and payments to assess their ability to pay.

It could also help to time withdrawals of direct debits to avoid refused payments, by ensuring there is money in the customer’s accounts before attempting the debit.

It’s in payments, though, where the technology could have the most transformative impact on how the customers of today are served.  

PIS enables retailers to process payments from the customer’s account using their bank login.

Online shoppers (many of them still recent converts) then have the reassurance of using their bank’s online security measures when making payments. They also don’t have to enter any card details, which are so often the subject of high-profile data breaches. 

A hat-trick of wins for retail

Retailers, though, also benefit. Firstly, they do not have the responsibility – and potential liabilities – of storing card details. 

Secondly, they benefit from payments that are usually instant. 

And, thirdly, they save on the credit card fees that cost retailers millions a year. Open banking payments cost a fraction of the amount.

We are in a new normal, but other firms and other industries have gone there before, helped by businesses such as Yolt Technology Services (YTS), the leading open banking provider in Europe.

The tools are already available to meet customers’ changing expectations effectively and efficiently. We just have to use them.