Most market watchers now view Open Banking as an inevitable and accelerating structural trend. Indeed, what’s coming from this trend is akin to the 17th century open Dutch economy. Much like the Dutch’s entrepreneurial traders, innovative banks will need to master the art of both interdependence and bilateral trade. Winners will create value from both export and import flows to secure their share of the new value being created, navigate a far more competitive market and drive tremendous growth—all at an accelerating pace.
Done correctly, banks can exploit bilateral trade to thrive in this brave new world—strengthening their customer franchises and brand, maintaining a defined culture and growing business through open collaboration beyond financial services.
Get outbound Open Banking right
From an export perspective, with customers’ permission, banks will make certain customer data available to third parties in a regulated and secure way via a set of standard APIs. Third-party providers can then use those APIs to embed that information into their platforms to improve the products and services they offer. Under PSD2, third parties can also initiate bank-to-bank payment transactions on behalf of the customer.
Outbound masters will build customer loyalty, monetize their distribution reach, avoid becoming a commodity and generate new business by exporting information and services through:
- Strategic partnerships within a larger, mutually beneficial ecosystem
- Early API dominance, beyond the minimum regulatory requirements
- New products and services, bank micro-services
- New roles as Payment Initiation Service Providers (PISPs) and Account Information Service Providers (AISPs)
RELATED: Two of our four winning bank models are best placed to exploit outbound Open Banking: Digital Category Killer & Utility Provider
Get inbound Open Banking right
On the import side, banks can more meaningfully incorporate products and services from third-party partners into their offerings. This can be everything from data (such as free credit scores) to merchant-funded rewards and more.
Inbound masters will rapidly enhance personalized banking customer service, build customer loyalty, generate new fees and lower the bank’s operating costs by:
- Offering more banking products and services—such as loans, insurance products or money transmissions, wholesale funding lines, etc.—that lie outside their capabilities or risk appetite
- Extending their services beyond those traditionally offered by banks—such as home, auto, consumer goods, travel services—to support a more complete customer journey
- Embracing the range of product and service opportunities offered by fintechs
- Innovating more quickly, taking ideas to market in a few weeks or even days
- Distinguishing their brand when everyone has the same plug-and-play products
RELATED: Two of our four winning bank models are best placed to exploit inbound Open Banking: Digital Relationship Manager and Open Platform Player
We have the expertise to help banks find the best routes to navigate the Open Banking opportunity and sail around any threat.