Open Banking ecosystem – relevant, timely and appealing to customers
Open Banking and the use of open APIs [application programming interfaces] present an opportunity for banks new and old to serve as a distribution platform or marketplace for their customers. The idea is that a customer uses the bank’s app to access third-party products and services that have been carefully selected to appeal to their audience. This, in essence, is platformification.
For incumbent banks, the opportunities are plentiful; they already have the customer base and their challenge is to choose the right products and services and deliver them over an app that customers find easy and enjoyable to use. In doing so they become an ecosystem orchestrator and a platform provider and so can further embed themsleves into the lives of their customers.
The challengers meanwhile are up for the fight to acquire and keep customers and are using the opportunities afforded by platformification to expand their centres of excellence and build out from an initially restricted offering.
All to play for
And, according to a report by Fujitsu, ‘Technology and the New Banking Customer’, customers could go either way – it is the offering that will attract and retain, not the brand. By 2024, 35% of people will bank with a combination of challenger and traditional banks the report says.
But what are the case uses likely to attract and win over new customers and how are they being implemented?
Personal customer services
Aggregation is one area. This is being able to show customers a single, consolidated view of all their different accounts. There could even be some cashflow planning to provide ‘what if’ type analytics on savings, investments and pensions. The ability for a customer to quickly understand their financial position, explore alternatives and make better financial decisions is valuable.
Swedish SBAB Bank offers an app that provides just this sort of service. Its Mortgage Match service uses account aggregation technology to collect a user’s existing mortgage and compare it with an SBAB offering. It also has a customer-facing app to give customers the means to clearly see and manage their finances. Users can connect the app with their bank accounts to pay bills and transfer money between any bank and account directly, without leaving the app.
Payments initiation is another area of opportunity. Instead of manually entering details on a website, the customer instead just enters his or her bank and the app finds their details. Mastercard® debit card Curve is a good example of this. It uses a single card, linked to an account, to condense other debit and credit cards into a single point of use for customers.
Small and medium size business offerings
One of the best uses of platformification is within the SME segment, where the add-on products and services are relatively easy to define. This has been a good opportunity for challenger banks who specialise in this area to build out and leverage expertise. Tide for one, provides business current accounts and smart financial administration service. It also offers useful and relevant integrations with services such as accountancy, company expense cards, invoicing and company registration.
Starling’s Business Marketplace meanwhile, has continued to add new partners, such as workplace messaging platform Slack and health insurance provider Equipsme. These additions are among 24 services linking to business customers’ accounts and data for easy access.
The technology is already in place to enable an Open Banking platform ecosystem. The race is now on to find the best products and services that hold real appeal for customers, old and new, and deliver them over an easy-to-use app. Sucess means customer retention and acquisition – the holy grail in today’s banking sector.