Open banking and open APIs

Open banking and open APIs – why banks are turning to agile partnerships

It is the next big battleground in digital banking. Global banks are up for the challenge to innovate in the open banking space. Open bank hub initiatives that give customers the option to connect their data to third-party providers (TPPs) is now the second most chosen innovation strategy by global banks, according to research by The Economist Intelligence Unit.

For banks in the UK, there is no choice. They must respond to fast-growing customer demand for more control and ownership over their data. With customer consent, UK banks allow authorised TPPs to access their banking data to offer them tailored apps and services.  But there is also an internal opportunity here too to leverage the data they collect. By doing so, they will offer their customers the level of personalisation that challengers are already built to do. So for banks in the UK the question of embracing open banking is not a question of when, but how?


Unlocking the potential of open banking with agile partnerships

Incumbents have a choice to disrupt or be disrupted by a more agile, nimble competitor or challenger. The competition’s laser-like focus offers customers the best UX.  Legacy banks could be the biggest beneficiaries of the surge in demand for open banking solutions. But they will only be able to unlock the growth opportunities if they adopt technology strategies that deliver lovable products. So smart banks are turning to the expertise of agile partners to develop the next-generation of open banking solutions, powered by ground-breaking open APIs. Here are some of the reasons why.

Trusted partners can offer ready-made, tested APIs that banks and regulated TPPs can easily sign up to.  Agile partners also bring a nimble mindset to help banks to innovate from the ‘outside in‘. Their knowledge and expertise help banks and other financial services providers identify fresh business opportunities, explore what development in the space means for their businesses and their customers, and better understand capabilities. In addition to the product that supplies open banking APIs, an agile partner also brings the domain knowledge and expertise.


Building solutions from the customer back

A partnership model can mean that banks are quicker to market. These models rely on open banking solutions built from the customer back. The Economist Intelligence Unit study found that although 87% of countries had open APIs of some form in place to power open banking solutions. Unlocking the value of the investment is reliant on customer perceptions of the value of new products and services, consumer confidence in the security of the data, interoperability and the quality of the UX.


Open APIs – looking beyond open banking

Open APIs are opening up opportunities beyond banking.  Undoubtedly, widespread APIs will unlock opportunities in open finance and pave the way for providers to engage with customers through more personalised products and services. Open finance follows the same growth trajectory as open banking. New API use cases, like in-app payments, are also emerging in key verticals such as retail.  Insider Intelligence projects that the revenue growth in the UK which is generated by open banking alone will hit $2bn by 2024. How will your business secure market share?

If this has raised a few questions or you would like to explore open banking, then please do get in touch.