Open Banking is transforming the way banks operate, how they engage with customers, and the products and services they provide. It has become a global phenomenon, supported by regulations such as PSD2 and the UK’s Open Banking initiative, but driven by consumer expectations, business needs and rapid technological development.
To gauge the impact of Open Banking on the financial services industry, Efma and Finastra asked senior banking professionals about the challenges and opportunities they see, and the strategies they are putting in place for success. This report brings their insights together.
Our research identifies a paradigm shift taking place as banks face the need to decouple their customer channels so account holders can do transactions through any interface they choose. With less direct customer interaction, new business models and partnerships with non-banking players will be play a crucial role in banks’ efforts to integrate with customers’ lifestyles, interests and needs.
Technology is the key to successful participation in the new API economy, and most of the banks we surveyed plan to make significant changes to their technology because of Open Banking and regulations such as PSD2. However, we found that many have yet to make significant progress in refreshing their technology.
Most banks see ‘bank as a platform’ as the best approach to manage, run and scale their participation in the Open Banking world, and many will need an out-of-the-box solution to achieve this. We identify the challenges they face and discuss the key components and characteristics of a successful banking platform.
Ultimately, while most financial institutions believe Open Banking is an opportunity, a similar proportion also underestimate the threat it carries and their ability to remain competitive. Success will depend on the bank’s people and its platform, both of which are essential to enable successful innovation and support business evolution.
