To digitise processes in a consistent manner, banks are dependent on open banking. Yet they still lag behind in this area out of fear of letting third parties access their data. Here, open banking offers enormous opportunities because as stewards of customer data, it allows institutions to offer a wide set of services and therefore remain relevant to their the customers.
Digital transformation does not happen by having an app here and an online banking interface there. Instead, it requires an entire organisation to be transformed into a “digital universe” (Jim Marous). No company can do this alone, which is why the idea of a digital ecosystem was born years ago. Today, thanks to open banking, it is possible to jump straight from creating an idea to the execution stage – there are no more excuses. But whether such an ecosystem becomes more than the sum of its parts depends on the companies that take part in the process: They have to be convinced by open banking and not just regard it as a one-way street. Unfortunately, many mainstay financial institutions do not understand that open banking is a case of give-and-take. All they see is the give; they have to allow third parties access their clients’ data, and naturally they are not too pleased about this, and they feel they are bullied into this by the regulators. The supposed risk of sharing one’s own customer data with potential competitors is completely overshadowed by the much higher inherent risk of not taking full advantage of the opportunities offered by open banking. This is because open banking allows banks to make use of third-party data to serve their own customers and therefore offer them a much more comprehensive range of services from a single source. Only then can banks they remain relevant and attractive to their customers.
Don’t lose pole position!
Mobile banking users often log in and review their accounts, sometimes even several times a day. So who, if it’s not the bank, should know customers, know what they need and which offers will promise the highest conversion rates? Looking ahead, a good approach could look something like this: From energy suppliers and mobile phone providers to digital information and entertainment formats, customers could receive offers on a host of products and services, which would in turn increase customer satisfaction levels and increase margins. . And then there’s the question of timing the offers: a bank’s own financial products, products from other providers such as investments, loans, building society savings contracts or insurance policies can pop up in the banking app when the customer is most receptive to them – not because the bank catches the customer at a random time, but because the customer is actually in need of a new car insurance policy or needs a cash injection right now to fund their next holiday.
Look to Asia
As in the fight against the pandemic, it is worth taking a look towards Asia when considering open banking: Chinese banks have already integrated “real-time epidemic cards, mobile medication delivery and online donation services” into their apps. Alipay is promoting the development of 181 mini programmes for their own apps, covering many areas in life such as food delivery or legal and medical advice. So there are enough best practices out there and good reasons why you should get serious about open banking.