Open banking is a topic that can no longer be ignored, with the vast majority of financial institutions expecting the biggest changes in the next five years.
The opportunities presented by open banking are huge. Banks connect the dots and develop insightful customer journeys; tap into an exceptionally broad marketplace; integrate with third-party services; and enhance their own offering – all to engage with an expanded customer base more fully.
Those at the forefront will be best-placed to establish the necessary parameters to ensure a smooth transition to this brave new world. But where to begin?
Evaluate the journey
For many US banks, the immediate task is to assess how prepared they are for open banking – and to prepare for a proactive, rather than reactive, stance to the changes ahead. The majority of 2022’s activity will be directed towards revisiting current platforms and ensuring they can accommodate open banking and any other initiatives requiring real-time capabilities.
That will definitely need a clear roadmap to be laid out, and almost certainly resources and budgets to be re-allocated. The roadmap will also need to take regulatory considerations into account, so any impact of legislative change can be absorbed along the way.
CIOs in the room
Banks need to get the right people on board, and it is essential that IT departments are fully aligned with business strategies. That is always true, of course, but particularly in this case. In open banking, technology is not the add-on to or enhancement of a set of services. It is the service.
Therefore, organizations need CIOs to be actively involved: not just in the technical conversations but every aspect of the initiative. The added advantage? They will be better positioned to tap into institutional knowledge and deliver invaluable insight during transition.
Open up about APIs
The entire concept of open banking revolves around the use of open APIs – the bits of code that enable different systems to ‘talk’ to each other and share information. This is already widely used in banking to connect internal functions – but now they need to connect to third parties and even competitors. Because in the open banking environment fintech businesses are not just disrupters, they are potential partners.
Getting the right open APIs in place is critical to creating this collaborative environment in which customers are major beneficiaries.
Unearth the data
Having stashed their valuable intel in disparate silos over the years, banks have yet to realize the true potential of this most valuable commodities.
Open Banking changes that too. With open banking, comes extensive data flows in forms that can be organized and used to create value – provided the right systems are in place. Internal data reserves are also enriched by outside information coming in from both structured and unstructured sources, from CRM systems to social media posts.
The result will be a powerful cocktail of data: so, banks need to ensure that this too is not buried deep in legacy siloed systems.
Open banking means open partnerships
Finally, banks can also tap into the know-how of partners. Open banking is just that: open, and collaborative. More than ever, banks will be engaging with third parties of all kinds, including those with experience of executing open banking ecosystems – as seen in Europe and Asia. That can be the difference between sailing smoothly into the future or getting stuck on the rocks.
Fortunately, the experience is available. Banks just need to be open about their requirements.