What bank can do to win in the new world of open banking? Part 2/2

According to Boston Consulting Group, open banking has the potential to increase or decrease retail banking revenues by 15-25%. The effect depends on the adoption strategy. So what actions can the bank take to win the battle in the new world of open banking?

What bank can do to win in the new world of open banking? Part 1/2

Creating new distribution channels – Another action that the bank can take is “behind-the-scenes activity”. In this increasingly fragmented world of finance, entities open to cooperation with a simple integration mechanism will be attractive partners for cooperation for TPP. Collaboration with partners let the bank be able to sell its products and services via more distribution channel. The necessary elements must be included in this calculation to end this action successfuly: the banking products themselves must be of the top of edge quality and the bank itself must be armed with integration facilities that will allow efficient cooperation. It is also worth remembering that TPP should be treated as valuable customers who can increase our revenues.

Savangard PSD2 Solution –ensure full compliance with PSD2 and unlock the banks’ capabilities with open banking.

Creating new business models – Another possible scenario will be the creation of new business ventures outside the bank’s corporation, e.g. in the form of establishing companies providing services for a specific market. Although examples of such an approach can be easily found in the past, the conditions and opportunities that will appear in the era of open banking will be completely different.

How do these implementations look in practice?

Banks are aware that this is a crucial moment for their future. Some have already reacted and adapted to new conditions.

HSBC UK launch of the product Connected Money (app available on iOS and Android platforms) allowing the user to view the full list of their accounts, credit cards, mortgages and loans no matter who is a provider. This approach can help the client better manage and control finances.

Metro Bank has built a portal for developers that allows verified TPP to develop services based on their API. The portal share documentation and Sandbox for testing API requirements.

Wells Fargo has created a comprehensive solution. Bank create a separate organization with product and technology teams to develop open banking solutions. To expand API offer, the bank entered into a partnership with several fintechs. To provide a friendly and easy environment for developers, created API Portal – a safe environment is to encourage TPP to cooperate. This approach secures the bank from two perspectives. First of all, it allows to add new services to portfolio, and secondly, it provides easy access to services to TTP. In the entire process the customer was not forgotten. He decides what data will be available to TPP and all process is taking place in a fully secure environment. The effect of this actions makes open banking platform created by Wells Fargo one of the largest on the financial market.

Banks need to be aware of the issues that he must face – e.g.: understanding the requirements and preparing a strategy, providing the right technical facilities, in most cases limited resources or finding the right partners for implementing the monetization strategy. However, the awareness of challenges should be able to help them respond appropriately. The crucial aspect will be to define in which areas the bank wants to get involved, and the biggest winners will be those who will be able to use the shared information flow of both incoming and outgoing data, fully participating and benefiting from the new multilateral ecosystem.