Other parts of this series:
In our last post we discussed the different channel strategies banks can adopt when considering their place in the open banking ecosystem. We spoke about the opportunity this brings for banks to distribute their products through non-banks and for banks to distribute non-bank products.
Globally we are seeing this happening already, and conversations are increasingly turning towards the concept of open data. This leads to a blurring of the boundaries between industries and a situation in which banks face new competition from companies they had not previously considered as competitors. Banks should pre-empt this and consider the strategy of these players. Big banks in Australia should not just be looking at the strategies of their big-four peers; they should be looking at those of organisations like Telstra and Qantas too.
This is more relevant in Australia than most other markets because this industry convergence is a certainty – the regulation here prescribes it. The Consumer Data Right roadmap includes energy, telco, super and insurance – a globally unique approach to Open Banking regulation.
Today’s opportunities for cross-industry use of CDR
Today, any Accredited Data Recipient can, with the consent of the consumer, access banking data held by a participating bank. This data doesn’t have to be used for banking products. As an example, energy companies or telcos could use CDR data to identify vulnerable customers and offer support to them.
What’s more, Open Banking brings with it the proliferation of new business models. Banks could distribute energy, telco, insurance or pension products through their channels, and third parties could distribute FS products via their channels e.g. white goods or car retailers could offer loans.
In the future, when CDR for Energy and Telco rolls out, many more cross-industry use cases will be enabled. For example: When a customer moves house, a provider could develop an offering that leverages CDR APIs to offer the best mortgage deal for buying the house, the best energy and internet deals when they move in, a frictionless switch between those providers once the customer chooses their preferred deal, and a change of address with the customer’s bank.
When CDR for Super and Insurance lands it will enable a truly full picture of a customer’s financial health and wellbeing, enabling the provider to offer holistic financial advice.
Even outside of those markets where industry convergence is regulatory-driven we see embedded finance as an emerging trend. In Asia there are organisations like Grab that started as a ride-sharing business and now have an extensive financial services offering. Similarly, travel marketplaces such as expedia.com are beginning to integrate financial services products like payments into their core customer journeys.
Banks stand to benefit from embracing this open data economy via the wealth of new revenue streams, the opportunity to differentiate and the ability to retain customers. Those organisations that partner with banks to embrace this economy will benefit from access to new customers and revenue growth. And of course, the customers at the raw end of this will see a better CX, frictionless journeys and more specialised offerings.
Banks should decide where to play in this open data economy, and build a differentiated offering early by locking down anchor partnerships.
Read more of Accenture’s latest thinking about Open Banking here: