Guest blogger and Nordic Banking Lead, Jostein Damminger, discusses open banking opportunities
With the introduction of the revised payment services directive (PSD2) in January 2018 just around the corner, banks face a new and potentially disruptive era. Open APIs and PSD2 will, in time, disrupt traditional banking. It’s no surprise, then, that the majority of global banks are planning to invest heavily in open banking initiatives by 2020, as revealed in a recent Accenture study.
But are consumers ready to embrace the era of open banking? Customers will, for example, be able to share access to their financial data with non-bank third parties, which could provide customers with new, innovative services using their customer data. However, consumers appear to have their doubts and concerns about financial services being provided by non-financial third parties. Another recent Accenture study shows that two-thirds of consumers in the UK said they won’t share their personal financial data with non-bank providers.
These results suggest that banks already have an extremely valuable competitive advantage they can use as they build their open banking initiatives: their customers’ trust. But in order to capitalize on this in a rapidly changing market landscape, banks need to act now and create their strategy for winning in the era of open banking.
The banks need to move quickly because while they currently possess the advantage of customers’ trust, the study shows millennials are already significantly more open to using services from non-banks. Banks should use the time before PSD2 APIs become mandatory to strategically plan for open banking, create compelling digital launches, link into ecosystems and gather a developer community to be better positioned before non-banks make their moves.
In the Nordics, we see quite a mixed degree of preparedness between various banks to enter the new market. In contrast, for example, retail companies seem to be actively grasping the upcoming opportunities. Many Nordic banks face challenges from adapting their legacy systems and architecture to become Open API-enabled business models.
Reach out to us to learn more about how to address open banking in order not just to comply—but to compete.