The roadmap to connected and customer-centric banking
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From PSD2 to Open Banking: The roadmap to connected and customer-centric banking
Over the past 18 months, one topic or acronym has been the main concern of the banking industry: PSD2 or tendered Payment Service Directive II. Driven by legal requirements, banks had to develop strategies and solutions to open their systems to third-party providers. This caused that PSD2, as well as similar legal and market-driven regulations outside Europe, became synonymous with Open Banking. The fact is, however, that the resulting APIs (Application Programming Interfaces) are only a first step towards connected banking and towards the strategic development of banking and financial service providers, as Michael Haus, Customer Solution Manager, explained at the Open Banking & APIs Forum in Amsterdam end of February.
After all, in addition to regulations and voluntary market standards, other factors are driving the development of open ecosystems. With the digitalization of our society and the emergence of major technology platforms such as Google, Apple, Facebook and Amazon the needs of consumers worldwide have changed dramatically. Customers compare more, expect a high degree of customer orientation and are looking for solutions that cover their needs holistically – keyword “one-stop-shop solutions”. At the same time, the market is changing due to emerging digital banking and financial services providers who are competing with established companies and want to satisfy precisely these changing customer needs.
API interfaces simplify the integration of partners and lead to a permanently changing market landscape. Banks are aware of these developments, as current figures on the topic of Open Banking confirm: In the “Report of Cloud Elements of the 2019 state of open banking”, 87 % of banks stated that they had already developed an API strategy. In addition, 75 % of the bank decision-makers surveyed said that they already work with integrated platforms.
For banks, this means that they must develop new strategies and business models in order to secure their bank-customer relationship and thus their greatest competitive advantage in the long term – established access to customers. But which components are essential for banks to evolve from a regulatory-driven API banking to customer-centric platforms?
From our perspective, three aspects play a central role:
Long-term customer loyalty through innovative financial products
Customer-centric offerings are key – but banks should not only look at their own industry but also at non-bank players. Because the GAFAs, in particular, offer customers a central point of contact for their needs. The central question for a bank is: Which services have become commodities, which fintech innovations can be used to create added value and bind customers with an integrated offer? Banks should capitalise on the trust they have earned.
Uniform understanding of the platform strategy and goals
In addition to formulating and communicating the strategy and goals, it is imperative for a successful implementation of an Open Banking ecosystem that a common understanding exists within the company. Platform solutions are complex structures. For a successful implementation, both the range of products and complementary partner services must be taken into account. A common understanding helps to implement projects faster, easier and more successfully.
Flexibly scalable infrastructure for further growth
The path from individual interfaces to a complex ecosystem is long. Therefore, the selection of the technological infrastructure plays a decisive role in the initial phase. It must grow with the requirements and offers. A flexibly scalable infrastructure paves the way for a successful Open Banking ecosystem in the future.
Conclusion: The fast lane to the Open Banking future
On the road to an open ecosystem, banks benefit from their long-standing customer relationships and market know-how. However, this competitive advantage will be easily squandered if there is no clear Open Banking strategy, which from the outset also includes the selection of suitable technology partners. After all, while banks are the experts on finance, they are not experts on open platforms. A good technology partner must, on the one hand, meet the bank’s needs, especially with regard to high-security aspects, and, on the other hand, offer a flexible and mature technological infrastructure. If this is given and a clear Open Banking strategy is in place, you will be able to take the fast lane to the Open Banking future.
Would you like to learn more about Open Banking and how you can implement Open Banking for your company? Please contact us, we will be happy to advise you.
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