Banks to turn to 'open energy data' to help customers

By Håkan Ludvigson, CEO at Eliq
Soaring household energy bills are prompting consumers to think hard about how to reduce bills – and some banks are stepping up

European households are paying more than ever for electricity and natural gas. This is a major contributor to the cost of living crisis that people are experiencing.

One impact is that retail banks are coming under more pressure to help customers.

In the UK, Chancellor Jeremy Hunt last month called for major retail banks to do all they can to support customers who are struggling to pay their mortgages. And the issue doesn’t just exist in the UK. Retail banks in the European Union and in the US face similar pressure to help customers that are struggling to make ends meet. This pressure comes from politicians as well as the public, but it is also a crucial step to take in order to protect their own business models.

High energy prices are not purely a financial issue. In November, energy consultancy VaasaETT and the Household Energy Price Index shared an analysis in The Economist warning that current high energy prices could kill more Europeans than Russia's ongoing war on Ukraine. The cost of living crisis may be putting unprecedented financial pressure on people in Europe – but, for tens of thousands, this crisis will cost them a lot more than money.

But European retail banks are seeing an opportunity to help their customers in this toughest of winters, by using digital systems that help people to reduce household energy bills.

This month, Belgian banking giant KBC teamed up with Eliq to launch an Energy Insights service in KBC Mobile, which is an app used by over 1.9million customers. It is intended to help customers better manage their finances by highlighting inefficient household appliances; benchmark against similar homes; and help them set savings targets. KBC recognises that reducing energy usage is one of the keys to cutting bills.

In June, Spanish bank Santander launched an online simulation service that it said would help customers to reduce their energy consumption, by modelling the impact of different household improvements; and others, including The Co-operative Bank and Royal Bank of Scotland, have launched similar services too. These systems are intended to help customers to reduce both their carbon emissions and energy use.

This offers a short-term benefit to consumers that are experiencing the financial pain driven by higher energy prices. However, it also signals a significant shift towards the use of ‘open energy data’ in sectors including banking. More data than ever is being collected about customers’ energy usage and this can be used to help customers.

Open energy data

To understand ‘open energy data’, we must first look at the significant digital shifts in the domestic energy sector over the last two decades. The growth of smart meters in Europe means that huge amounts of data are being collected about energy usage but, for many years, consumers were unable to gain any value from this information.

This has been changing over the last decade. Utilities have sought to share insights with their customers about the financial impacts of their energy decisions, which are then meant to help customers to make better choices. These insights are based on the aggregation of energy-related data from a host of sources, including power price and emissions data; analysing it compared to other energy users which, at Eliq, is in an anonymised database of millions of homes; and then giving tailored advice.

For many years, the goal was to help households to improve energy efficiency, both in terms of the building fabric and their behaviour within it, to reduce emissions and energy bills. The current cost of living crisis has made this a bigger priority.

But what about the ‘open’ in ‘open energy data’? That refers to the way utilities and other types of companies, including banks, can access the system that analyses this data and provides insights for consumers. Utilities have been using this technology for years, but other companies including retail banks are now seeing the benefits too. 

By tapping into this information, they can provide insights that help their customers to make smart financial decisions about deals that impact their energy usage. This includes which type of home they might buy; how they invest in improving that home; which car they drive; and which household appliances they add to their household. Consumers need to be aware that these decisions could have major impacts on their total energy costs.

‘Open energy data’ is set to result in greater transparency about energy use in real estate adverts, on price comparison websites, and from vehicle manufacturers. This can help give consumers greater accuracy about the likely costs of their assets over a ten-year horizon or longer, even factoring in the greater complexity in energy tariffs due to the higher grid penetrations of intermittent renewables.

And what does this actually mean for retail banks?

In practice, this means banks can provide integrations in their apps and web portals that help their customers to manage their energy services. The banks that do this can help build trust that will support customer retention, as well as enable them to identify which customers may be at the most risk of falling into financial trouble. 

Banks also see there is a benefit in terms of achieving their ESG commitments, and ensuring that they do not write mortgages for homes that may lose value as a result of government policies targeted at inefficient homes. 

In France, for example, it will no longer be possible to rent a home with energy consumption of more than 450kW/sq m from January 2023; and these rules will get tougher in January 2025 and January 2028. Greater transparency over energy data will be crucial to risk management for both retail banks and for the public.

We are only at the beginning of this shift. However, over the next decade, we believe the companies that unlock the opportunities offered by ‘open energy data’ will gain a significant competitive edge. We expect to see similar deals in the coming years.

And in the short term, these insights could provide a lifeline for consumers that are struggling with the cost of living, while showing that banks can be part


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