Open Banking — A foundation for better customer engagement
By: Rana Peries
Tags: Openbanking, Digital Banking, Ecosystem, API, Marketplaces

Open Banking adoption has been steadily growing in Europe and the UK, where it was first introduced. In addition, a growing list of other countries have either adopted or are in the process of adopting the Open Banking standards.

The Open Banking standards are now giving rise to a range of new business models and use cases. In Part #1 of this article, we will share a few simple facts that we believe are fuelling Open Banking adoption and why Open Banking will become a strong influence in the market.

Banking is not in Vogue

Let’s face it, your Banking app is not the first app you click on every morning, is it? An average user has 25 or so regularly used apps on their device. The following chart shows the most used apps in a month. A notable absentee is the Mobile Banking app. The reason is simple. The typical Mobile Banking app lacks the features that make it ‘sticky’ and useful for the consumers on an everyday basis.

My Banking App is not helping me

This is another important factor. Where the Internet Banking or Mobile Banking app has the features, those features are Bank centric and not Human Centric. Let’s consider a simple case of a Loan Application. The Banking apps, more often than not, mimic what the Banks have been doing for a long time — a boring loan application form. Even though the person may already be a customer of the Bank, the Bank is unable to ‘help’ the consumer to fill up the application. Not very useful, is it?

On the other hand, consider going through a home buying experience. Whilst the Bank Loan and the Loan Application is important, there are so many other factors to consider. Where should I buy the property? Is the location convenient for my / my family’s lifestyle? Can I afford the property? Is the property close to good schools? Will the property value appreciate? Who can help me find the right property etc.

As depicted in the below illustration, there is a vast difference between the Loan Application App (left) from the Bank and a Home Buying App. The Banking App has evolved from the so called omni channel experiences that Banks have been investing in, whilst the Home Buying App (right) is a result of an ecosystem of service providers coming together to create a unique and a very meaningful & human centric experience.

The rise of the Marketplace Platform

People’s lifestyle needs do not revolve around Banks. Whilst Banks in the past expected consumers to use their Channels and Apps to access Banking services, the evolution of the digital ecosystems have changed the consumer behaviours so much that the consumers expect Banking services (like everything else) to be available where the consumers are.

Open Banking standards and the associated APIs are making it possible for Banks to make their services available to the digital ecosystems frequented by consumers. This in turn is popularising the concept of the Marketplace Platforms or Aggregation platforms that bring together the Banking service and Lifestyle services that delight the consumers.

Thus, to provide a complete home buying experience, a platform that facilitates the aggregation of Banking and Lifestyle services is required. Whilst a Bank may not be the primary operator of such a platform, Open Banking is enabling the Banks to participate in such ecosystems in a safe and secure manner.

In subsequent articles, we will look at some interesting business models that are evolving around Open Banking & Marketplace Platforms.