What bank can do to win in the new world of open banking? Part 1/2
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?
PSD2 – open doors to the new world of banking
Customers expect from service providers, including banking, is fast, friendly service in a well-designed and intuitive digital space – returning over and over again: provide an exceptional user experience. PSD2 directive, and its result open banking, is a area that banks may feel threatened. Where does this threat come from? Third parties are mentioned as the primary beneficiaries of the PSD2 directive. These are dynamically developing, technologically advanced entities that offer a wide range of intuitive, flexible solutions that are maximally suited to the user’s needs. At the time when the PSD2 Directive imposed an obligation on banks to open to third parties, they gained a wider room of maneuver.
In addition, API solutions introducing new services or functions are often launched with quick time-to-market – even within a few weeks. In contrast, the bank as an institution traditionally associated with an ingrained, slowly reacting entity changes pale. But thinking about open banking as a treatment is a good attitude? Banks have aces up one’s sleeve – high level of trust, strong institutional position, technological facilities. Combining these factors with the choice of a good, proactive strategy change thread to opportunity.
Savangard PSD2 Solution –zapewnij pełną zgodność z dyrektywą PSD2 i uwolnij potencjał banku.
Adapt and evolve. Implementation of open banking – how gain on it?
Augment the current offer and improving the quality of services – the first thing a bank can do is to develop its API beyond the regulatory minimum and add new services to the portfolio (i.e., aggregate accounts view ) for banks customers. This strategy can help be more competitive on financial market and can convince clients to stay with us. If the customer’s needs are met – there is no need to look for them in other places. Additionally, banks may add extra services provided by TPP to banks offer, which until now were beyond the bank’s interest (for example due to the high level of risk), e.g. insurance products or remittances. What’s more: it is worth paying attention to time-to-market. The new environment of the financial world is going to be more dynamic. The traditional implementation of products will not take place at the standard of introducing new APIs, which time-to-market shortens even up to several weeks. In this matter bank will have to adopt to it too.
Sharing data and services to third parties is a popular trend in many sectors – finance is not at all unique. It all come down to one – monetization. In the API model, companies choose services from public and private APIs and integrate them thus creating new value – new services for consumers. Services and data shared via API will generate revenues for the bank. Examples of revenue generation models are, among others: revenue distribution or transaction fee.