Open banking: The race to deliver banking as a service

Open banking is a major shift in the retail banking industry to give customers greater control over their data and create a new connected ecosystem where banks, fintechs and other third parties to collaborate to deliver seamless financial services. From Australia to the UK, Japan to Germany, open banking will create difficult strategic questions for retail banks in all major markets to answer in the years ahead.

To understand how the industry is interpreting open banking and taking advantage of the new opportunities available, we interviewed chief information officers and heads of innovation, investment and digital banking from leading banks around the world. We asked how they are gearing up and tackling the challenges that stem from a rapidly changing marketplace and business model.

These leaders share the following insights about how open banking will create a new ecosystem that delivers banking as a service:

• Regulation as a driver of innovation. Where regulation often plays a catch-up role in putting guidelines around unfettered industry development, in terms of open banking it is seen as setting the pace. There is an extraordinary amount of collaboration happening between banks and regulators worldwide to create frameworks for open banking.
• Customers in control. Consumer interest in protection, privacy and control over their personal data has never been stronger. Open banking has forced banks to rethink the issues of ownership, storage and use of that data.
• Intelligent services of the future. Giving customers greater control of their financial data inevitably leads to a wider choice of financial services and forces banks to rapidly accelerate service innovation. Digital banking is part of this innovation as are application programming interfaces (APIs) – the technology used to package and move the data – and third-party collaborations. The promise of open banking is that banks can deepen their relationships with existing account holders as well as boost new customer acquisition.
• Uncharted waters. There are many uncertainties in how open banking will unfold, and ultimately where it will lead. Banks are in the process of creating strategies for open banking, thinking through how it will develop globally versus locally, and putting structures in place to assess the potential of new APIs and partnerships.
• Technology and culture. For traditional banks, legacy mainframe technology hampers their ability to scale new initiatives quickly. Innovation itself must be managed carefully, since any disruption to banking services could have huge implications and damage customer trust.

 Download the full report here.