Is multi-banking just account switching light?

Are you using multi-banking already? Trust me, your bank is very likely working on it and the feature will be advertised to you very soon. PSD2 and XS2A is forcing banks to open and provide access to it’s (untouched) holy grail – its customers data. As this is a big threat for most, but rather slow moving incumbents. However, making use of PSD2 and access data from its competitors is another story. Because that’s the way banks act.

Banking is known for its homogeneous landscape and most banks have more-or-less the same offering. Multi-banking is now another way for banks to attract customers from its traditional competitors. Implementing financial accounts from its competitors into own banking front-ends is aiming in the short-term for higher customer interactions. But in in long-term? I assume the goal for most banks is to do cross-selling of other financial products. Since these players are pretty homogenous nearly all banks will follow. This is the typical me-too strategy where one player copies a new service, feature or product from a competitor in order to not be less attractive for its customers. This is very common in banking, and is especially applicable, when the initial action from one player is clearly targeting at attracting customers from its competitors. Multi-banking can be seen as something like this.

We have seen something similar like this already in Germany with the account switching services. Unlike in other countries, this is a service provided by most banks themselves (by using FinTech companies like fino or FinReach) and are aiming at making it easier to switch the main bank account. Because convincing consumers to open a new bank account is ‘not that hard’ but convincing him/her to make this account the new main account is pretty tough business. Technical solutions that help to transfer data (direct debit, standing orders etc) from the old bank account to the new one and also offering the option to close the old account is a pretty convenient feature. After the first banks introduced this feature, many banks were quick to follow because it is now easier for their own customers to switch to a competitor. Hence, it should be at least equivalent easy for customers from competitors to switch.

Probably by now you can see already the similarity to multi-banking: Account switching services might be just “short-term multi-banking”. The consumer connects both accounts, transfers the data and deletes the old account. Multi-banking is probably aiming for the same just in a slower process. Both services actually use the same technology (Access to account, like provided by figo), however, whereas the account switching tools have the direct goal to transfer the data immediately and also aims at closing the old account, multi-banking should convince the customer to switch financial products over the long-term due to higher satisfaction with the offering. Account switching services are basically the cold turkey for an unhappy bank customer and multi-banking the slow-substitution equivalent.

Currently, multi-banking is becoming the new normal in online banking solutions. This makes banking more convenient, switching accounts can be ‘safer’ since it can done when a customer is totally convinced and is the first move away from silo-thinking. Personally, I believe multi-banking could be a lot more than just a slow account switching service, however, it is probably still too early for that…

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