For many years, banks have been digitising their existing products and channels to make it easier for customers to do what they do already. As Open Banking becomes ever more pervasive, it has capitalized on customer payment data to allow customers not just to do familiar things more easily or at lower cost, but to do new things they never knew were possible. 

This is paving the way for much more significant advances through Open Finance – using increasingly diverse data to enable a new wave of disruptive service innovation. Open Finance, together with the significant growth underway in fintech funding in the UK, will drive more change and choice for customers in the coming years than we have ever seen before.  

All to play for in the Open Banking arena…  

First, some context. Open Banking has now decisively come of age, with multiple reports highlighting the revenue opportunities from getting it right. Take Accenture’s recent Ready to catch the Open Banking wave? report, which estimates US$416 billion in banking revenues at stake, or our joint industry survey with Plaid on Embedded Finance, projecting US$230 billion in net new revenue by 2025. 

So has the global journey to Open Banking effectively reached its destination? Are the worldwide roll-out of broader ‘open data’ approaches and the inclusion in OBIE’s roadmap of major deliverables like sweeping and variable recurring payments (VRPs) the ultimate fruits of this innovation? Not at all. 

In fact, the opportunity is only just beginning, as Open Banking capabilities mature industry-wide, customer adoption takes off – and the potential for service and experience innovation expands exponentially. 

…as two key shifts trigger a tipping-point  

It’s a tipping-point that’s been in prospect for some time – and has now finally been triggered by two key shifts. First, some previously theoretical concepts have now crossed the line to become reality: take the launch of CoGo at NatWest, which moves Open Banking beyond information to action by combining smart analytics on transaction data and behavioural science to help customers reduce their carbon footprint.  

Second, many payment journeys using Open Banking APIs are now super-slick: moving money into Monzo via its “easy bank transfer” involves just a few simple authorisation taps in the app. No more remembering account numbers and passwords or digging out cards. 

A rising trajectory 

Fuelled by such advances, Open Banking is set for escalating growth. Consumers trust the new brands and are ever more eager to use their services: Klarna – a pioneer of buy now, pay later (BNPL), a model that we’ll cover in a moment – is a prime example. 

Incumbent banks are also increasingly open to sharing their brand real-estate with new entrants. At Accenture, we’ve loved seeing many of our own FinTech Innovation Lab alumni achieve this, such as CoGo – as mentioned above – for carbon tracking at NatWest and ApTap for subscription management at TSB.   

Creating services that mirror today’s lifestyles – with Open Finance  

What’s prompting this ongoing flurry of activity? Looking beyond Open Banking, the focus now is on the rich potential of Open Finance, using data to create service experiences that mirror consumers’ changing needs and lifestyles. Take BNPL: rather than taking on debt, for younger users it reflects the way they shop online, buying several items and returning those that don’t fit.   

It’s a behaviour-based service innovation on a par with Netflix in video streaming. And it’s just the start. Not only is the number of ‘embedded finance’ providers growing; what’s more, these providers are already looking beyond payments and transactional retail banking to the entire financial value chain. Witness the rapid growth of Open Insurance and Open Retail. 

And going forward, as the customer data flowing through the Open Banking ecosystem becomes bigger and more diverse, the opportunities for new services will keep expanding with it. Examples? More personalised mortgages with better risk scoring. Democratised wealth products that serve mass-affluent customers profitably. More fluid and portable pensions geared to people working flexibly – as prefigured by offerings such as the Pensions Dashboard. 

Ready to ride the swell?  

So the Open Finance opportunity is massive. But capitalising on it can’t be done overnight: your organisation must be ready to surf to the future. Which means asking, are you ready with your…? 

  • Capabilities – such as data management and ingestion; 
  • Agile architecture – such as microservices and event streams; 
  • Channels – such as developer-friendly portals and digital marketing; 
  • Operating model – for new skills and customer support; 
  • Delivery model – to iterate quickly and respond to feedback; and 
  • Third-party management model – to deal with all those partnerships. 

Get all these elements right, and you’ll be well-positioned to claim your place in the bright future of Open Finance. And to tackle the challenges that remain along the way – like using open approaches to build trust among consumers, through user-friendly, centralised consent-and-controls across their multiple data-sharing relationships. 

Organisations that get on the front foot here will quickly seize revenues and market share – while also supporting their customers through a sensitive change of mindset as their data becomes more ‘open’.  

Positioned at the heart of innovation 

We’re looking forward to being part of this swell of innovation, creating the next wave of services for customers and society. If you’d like to get closer to the action, click below to read our full report Catching the Open Banking Waveor join us for the 2022 Fintech Innovation Lab featuring embedded finance pioneers. 

The message? The future of banking is happening now. Organisations need to be rapidly mobilising their approach to Open Finance and getting involved – otherwise they’ll see the competitors powering ahead of them.  

Contact me here to discuss Open Finance at your organisation.  

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