What if Google offered mortgages? Payments were made through Facebook messenger? Credit cards disappeared?
The opportunities for innovation and, ultimately, improved services for consumers under Open Banking are infinite. The question is, what do you as a financial services provider need to do now to secure your place at the table in the new world?
Strategic planning is worthless… unless there is first a strategic vision
Firstly, you need to set the ‘North Star‘ of your aspirations for Open Banking. Consider what your customer research is telling you, what leadership wants to achieve, what the overall business strategy is and what the regulator is saying. Once you have that consolidated view, you can determine what your strategic vision will be. For example, you might decide that mortgages are central to your strategy and you intend to use the opportunities that Open Banking presents to put yourself centre stage on this.
A great vision without great people and support is irrelevant
You then need to determine what capabilities you need to achieve your vision. Will your analytics capabilities set you apart from the competition? Do you have the skills within your organisation to achieve the strategic vision? Will you be able to respond to real-time change? The capabilities you need to comply are very different to those you need to compete and innovate. Once you have determined what your chosen capabilities are, you then need to source them – are you going to build them, buy them or partner to get them?
If you don’t know where you are going, you will end up somewhere else
Think about the road you will need to take to achieve the strategic vision – what is the portfolio of change required, what do you need to do and in what order of priority? Delivering your plans might involve collaborating with fintechs or even outsourcing the new propositions to a third party completely. You may need to build whole new capabilities and teams. Getting the steps lined up and documented into a delivery plan that can be translated across the business, and delivered on, will be paramount.
Success doesn’t just happen, it’s planned for
Currently, most financial institutions are understandably focused on pure compliance activities to meet the PSD II implementation deadline in January next year. However, keeping one eye on the future and developing strategic thinking on how you are going to maximise Open Banking opportunities over the longer term will be key to obtaining competitive advantage. Teams should be in place now to consider the ‘art of the possible’ under Open Banking and assess the systems and operations that will be required in the future.
Many ‘unknowns’ still exist due to the pace at which things are changing. In order to mitigate the risk of losing out on value and being relegated to the role of invisible infrastructure providers, banks need to be future-proofing their business and building for the long-term possibilities of Open Banking now. Putting in place systems and operations that are agile and that can be flexed to respond accordingly to updates and changes will be the essential to harnessing the future possibilities.