Open Banking brings increased revenue to those who can collaborate

Amit Dua, Suntec: banks and fintechs, combine your strengths!

With new banking reform on the horizon, Amit Dua, president of Suntec Business Solutions, assesses why customers will improve their financial and life circumstances if heritage banks and young fintech firms find a way to combine their strengths.

Partnerships are catalysts for change

This evolution in the financial services industry is introducing more competition to High Street banks. The good news for customers is they could get better offers as every licensed bank, young and old, will be able to use tangible and intangible data from customers who allow their data to be shared. Some see this change as a threat to the old guard and ignoring the opportunity for progress.

Instead of blocking fintechs, the more innovative banks are building strategic partnerships with the younger and tech-driven banking start-ups found within their ecosystem. With the limitless possibilities Open Banking will provide for banks to become the customer owner, smart banks shouldn’t stop themselves at FinTechs and look to partner up with companies who can offer added value in their supply chain. One such tactic can be seen through cross-industry partnerships, which has happened between retailers and banks, bringing the value customers demand and expect.

For any collaboration to be successful, banks need to source and confirm the best partner for them. Having the right partner allows them to offer new tailored services to customers. This could mean better products for consumers, and a faster route to revenue for banks and their partners.

Collaboration is key – the value for both partners and customers

When it comes to sourcing new partnerships from January 2018 and beyond, banks have options. The bad news is that they have so many options it is quite easy to be overwhelmed, confused and make the wrong choice of partners. To avoid those deal breakers, banks need to be able to assess the value potential partners could bring their customers.

In order to ascertain the full value of each partner, banks should build a partnership ecosystem, and be able to see across all of their customers and partners’ transactions. Complete visibility across all transactional data gives product builders and marketers the true insight of any customer.

• Banks will be able to track value across its marketspace and see problems from a customer’s point of view. This will create the upsell opportunity by assessing which additional products or services are needed by the customer.
• Banks will understand what their rivals are offering and have the opportunity to respond. This is the biggest change in the previously opaque industry. This broader vision gives banks the opportunity to evaluate and potentially poach the most lucrative partnerships.
• Banks which surround themselves with open ecosystems becomes a value aggregator will own the customers, partners and other stakeholders. The organisation owning the ecosystem will solely be able to enhance the total value of the entire system, thus controlling the economics.

Technology is the enabler of collaboration

To put this partnership ecosystem in place and reap the benefits described, banks need to have the technology platform in place, enabling them to see across all transactions. Banks need a scalable infrastructure which is able to react to on boarding and offloading partners, and calculate the enumeration for partners based on performance-based goals and flexible enough to handle various payment models. Without it they are losing out on opportunities, in an industry where the competition will punish such mistakes.

This technology for Open Banking is rooted in Application Programming Interface (APIs), which allow banks to see transactions of data across their entire network. If deployed correctly, API technology can provide a secure environment for these transactions as access to these data pods will only be given to authorised parties. As news of data breaches multiply and consumer anxiety over how their data is used increase, the financial services industry must set concise policies complementing the technology and educate both banks and consumers.

The most important asset APIs provide is greater data analytics capabilities because banks will have access to more data than previously allowed. This helps banks to identify sales opportunities which the customer has not spoken about yet. It allows banks to anticipate on those needs, which is the mark of a high quality service that customers value. Successful services in the digital age are those that anticipate customers’ needs, using data driven insights to solve customer issues in a way that is exciting and almost magical to the customer.

Customer driven banking – a new frontier

Open Banking has a huge emphasis on customer centricity, as banks move away from a product focused mentality, prodded by strong, almost irresistible industry trends. This change will require a total cultural shift in the way banks operate on a daily basis and strong leadership will put banks on the right path to success.

Banks should work towards the long term goal of providing not only basic savings and mortgage services, but a lifetime service which improves their customers’ circumstances. Aside from making friends with industry partners, banks should look at cross-industry partnerships and change the way they create and manage partnerships.

The future is data driven and with the budget and talent pool available, banks should already be living in the future. There is some way to go until the winners of Open Banking is announced, but the victors will likely be those who own their customers by embracing collaboration in their culture and powered by a flexible technology platform. Those financial organisations who own the customer will own the economics.

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