The Adoption of Open Banking Models
FREMONT, CA: While 2018 was a steep learning curve for all the financial institutions involved in open banking, today, they are witnessing some serious transformation. However, the most significant challenge for the banks is to capitalize on a new set of changes relevant to the digital era.
It is imperative to analyze the statistics and gain insights from the experience of some of the early players. Transition is always a challenge. And when the UK’s established banks were to suddenly allow a third party to access consumer accounts (post account holder’s approval), they had to make a decision. Disregarding the option for any outside help, they went on to develop their APIs for the third party access. Apart from spending a fortune, the lack of expertise affected the setup. Finally, they managed a complex environment for the purpose while also missing on the government’s open banking deadline.
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Focus on Open Banking’s Use Cases
The biggest take away from the above example is to leave the technical overheads to the experts while focusing over strategies to design new open banking use cases. The budget, time, and strategic advancement, along with an innovative consumer-centric approach, will be the key to leverage open banking.
With new open banking applications emerging, social media has also started to portray consumer benefits. For example, some apps can invest the ‘loose change’ from in-store card purchases or e-commerce.
The potential of open banking to generate revenue potential is getting recognized. Open Data Institute and PwC have estimated that by 2022, £7.2 billion could be the worth of associated investments. And with the major UK banks adhering to the open banking standards, numerous consumer-centric use cases can be expected in 2019. An important consideration is to explain the potential and benefits of open banking when communicating to the consumers.
There are gray areas like ironing out the strategic decisions among banks and their partners. The banks must also lend their trust to the external experts and should recognize what open banking has to offer.