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UK: Why Open Banking is Critical to Customer Growth in Direct-to-Consumer Investing

When a consumer expresses interest in investing, the journey to apply for and subsequently fund an account should be as intuitive and seamless as possible. Industry disruptors like Freetrade and Lightyear have established themselves as leaders in doing so, while newer robo-advisors like Nutmeg and Wealthify are improving their processes, as well.

Industry incumbents, though, are a step behind.

A seamless retail investor journey is important because open banking, which enables instant funding of a customer’s account, is fast becoming the method of choice across the market.

Lightyear, which launched in October 2021, implemented open banking for funding after only a month. Tillit, which debuted shortly after, announced in February that it had implemented TrueLayer’s open banking payments API to provide a seamless investing experience for its customers.

Freetrade’s process, shown below, is one of the most effortless and simple processes in the market. Customers can instantly fund their account from their linked bank, which is sourced during the onboarding process.

Digital Banking Hub

Lightyear has a similarly simple process for funding. While other methods are available for customers to use, the platform’s default option is open banking.

Digital Banking Hub

When a customer uses open banking for the first time, they’re prompted to enter the amount they wish to add to their account, along with their banking provider’s information. Lightyear remembers these inputs, offering an expedited funding process after the initial action.

Digital Banking Hub

Funds typically arrive nearly instantly and are available to invest even though customers are told it could take an hour for them to arrive.

Digital Banking Hub

Open Banking isn’t just for new entrants, however. Longtime investment providers Nutmeg (launched in 2011) and Wealthify (2016) have also adopted it for funding, offering customers a seamless experience across their digital platforms.

Nutmeg and Wealthify both highlight how open banking is a quicker payment method for topping up balances when compared with other options like a card payment or direct debit. Nutmeg encourages customers to use open banking, noting that it is the fastest way to fund an account.

Digital Banking Hub

Dodl by AJ Bell, a commission-free offering, launched recently with a funding process that offers the option of Apple Pay or the use of their debit card.

Digital Banking Hub

While the implementation of Apple Pay is notable, as most incumbents have been slow to adopt newer, simpler funding solutions, it requires the extra step of customers adding their card to Apple Pay. With debit cards expiring every three years, the customer is forced to repeat this process over time.

Open banking also simplifies the process for customers who switch payment accounts on a frequent basis.

Hargreaves Lansdown is the market leader in terms of customers, but it significantly lags newer entrants when it comes to functionality, particularly on mobile. This is the case even though it saw three-quarters of the 233 million digital (desktop + mobile) logins come from its mobile platform.

Unlike their upstart peers, barriers to a seamless funding process greet customers using Dodl and Hargreaves Lansdown offerings, with card detail requirements along with the inability to save them for quick access later, respectively.

Digital Banking Hub

Recent actions, however, suggest that the major players are waking up to the digital disruption of the industry.

Hargreaves Lansdown has announced a 175m cash injection into its digital automation, although it remains to be seen if open banking is implemented from the likes of TrueLayer, Tink, or Plaid – each of which support peer providers’ funding processes.

As retail investment innovation continues to focus on the digital experiences, it will be essential for major institutions to keep pace with the shrewd moves of mobile startups and forward-thinking disruptors.

Their relevance in the business very likely depends on it.

Customer journey visuals and insights like the ones included in this piece can be found in the Digital Investments Monitor and Digital Banking Hub by Curinos. For more information and to request a demo, click here.

Sachin Patel (

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