Open Banking - Growth Opportunities in Retail Banking

Open Banking - Growth Opportunities in Retail Banking

Alistair Muir

CEO at Vanteum

Views 812

Open Banking - Growth Opportunities in Retail Banking

23.10.2019 07:45 am


Access to customer data has been a topic of conversation for many governments around the world in recent years, with many regimes around the world slowly moving towards legislation requiring data to be “opened up” to facilitate data sharing and portability.

Here in Australia, there have been several waves of this with a Productivity Commission report into Data Availability and use across the economy and the establishment of the Consumer Data Right (CDR) which enables greater empowerment for consumers to get access to the data that organisations have on them so that may provide this to third parties for better products and services. In Australia, the first implementation of this economy-wide Consumer Data Right is in Banking with “Open Banking”.

Whilst Australia is not the first jurisdiction in the world to mandate Open Banking through regulation, it is the first to regulate this as part of a broader framework that is to be economy wide.

Given we’ve been on our Open Banking journey for quite a while now, it still surprises me just how many Banks, Financial Services companies and indeed players in other adjacent markets are not clear on the Growth use cases presented by Open Banking. One explanation for this is that in Australia, there is still a large focus on the activities to comply with Open Banking rather than to compete in this environment.

As the Consumer Data Right in Australia extends beyond banking into Utilities (Energy and Telecoms), General Insurance (P&C), Superannuation (pensions), etc. the myriad of possible use cases for the data being provided through such a regime is mind boggling.

Instead of going into all of these possibilities here, I wanted to offer some concrete use cases for Open Banking in Retail Banking, specifically as I’ve seen in Australia, UK, Europe and elsewhere around the world.

With the right mindset, the right strategy, customer focus and ecosystem collaborations, Open Banking can provide the means to increase market share, grow revenues and develop new digital propositions in adjacent markets.


Retail Banking use cases

These examples are from what we have seen working with Banks, Insurers and Fintech companies both in Australia and in Europe and is intended to give a sense of what is possible in Retail Banking, specifically.

When considering which Open Banking strategies and use cases to execute upon, it is important to note that embarking upon an Open Banking transformation is certainly not a one size fits all proposition and is largely dependent on:

  1. The Bank’s Digital maturity
  2. The Bank’s Data maturity
  3. The ambition and overall strategy of the Bank

Open Banking use cases in Retail Banking

The use cases above are high level and intended to give a flavour of the opportunities that Open Banking presents in the near term and with some international examples of where these use cases have already been implemented to significant benefit.

Data Collaborations

In addition to Open Banking opportunities that leverage Application Programming Interfaces (APIs), there are also a tremendous number of potential growth opportunities that can be realised through secure data collaborations with trusted third parties. Such collaborations can support and compliment an overall Open Banking strategy.

Whilst I haven’t gone into any detail here, some examples that could be executed through third party collaborations include:

  • Leveraging bank data in combination with 3rd party data to enhance credit scores across personal, business and home loan customers
  • Fraud detection and Anti-Money Laundering compliance
  • Customer Marketing: Better segmentation, enhanced recommendations and personalisation, etc.
  • Provide entirely new data products to market and add new revenue lines

In my next post, I’ll write about the growing use of a field of technologies called Privacy Preserving Protocols (PPP) which are being used by banks and, indeed, regulators to build distributed artificial intelligence (AI) models for pattern identification across data residing with multiple participants without the need to “see” or exchange the underlying data. We very much see this as the next wave of “data sharing” and it will have a profound effect on Financial Services.


Latest blogs

Thomas Pintelon Capilever

Credit servicing - Much more than just a back-end process

While credit origination is considered as a very customer-centric process, the credit servicing part that comes afterwards is usually considered as a purely operational, back-end process. However, substantial added value and competitive advantage Read more »

Simon Cureton Funding Options

Due Diligence Vs Speed: Why It’s Not Either-or When It Comes to SME Lending

The coronavirus pandemic has put the SME lending market under the microscope with extensive debate on how to deliver the right financial support to SMEs at speed. Traditional retail banks usurped fintechs and were gifted the golden CBILs and BBLs Read more »

Keith McGill Equifax UK

Fraud Continues to Rise, but Faster Digitisation Will Bring Benefits

The results of the Cifas report show the changing face of fraud and identity theft across the UK. With a 13% rise in reports to the National Fraud Database from 2018, it’s clear that even before the pandemic struck there were a number of challenges Read more »

Darren Capehorn Icon Solutions

Unbanked and Unconnected: Supporting Financial Inclusion Beyond Digital

Many of us take it for granted, but accessing basic financial services is fundamental to our economic and social development. It is hard to ‘get on’ if you are forced to hide life savings under the mattress, or rely on predatory loan sharks for Read more »

Konstantin Demishev Archer Software

How Machine Learning Helps Fintech Companies Detect Fraud

Machine learning (ML) is one of the most discussed technological tools, and if in the past only a few companies could use it due to high cost and lack of resources, today many industries use ML. The financial sector is not an exception and embraces Read more »

Related Blogs

Mobey Forum Mobey Forum

Open Banking: Are consumers keeping an open mind?

Last September, the European Union’s regulatory requirement for banks to open up their payment accounts via application programming interfaces (APIs) came into effect. Since then, open banking has taken centre stage within European retail banking Read more »

Hakan Eroglu Mastercard

The Ambitious Path to Open Finance and Open Data ... How Europe is Leading The Way

Thanks to PSD2 in the EU, and open banking in the UK, Europe has been leading the way with its open banking initiatives. This significant development represents the beginning of a journey to democratise the financial services industry by allowing Read more »

Steve Morgan Pegasystems

New Banking Tribes as a Result of Open Banking Have Arrived

Open Banking has fundamentally changed the game for all of us in the banking and financial services sector. With shifts involving customer data, naturally there have been concerns as organisations transform, from how they can get a sufficient return Read more »

Christian Ball GFT Group

Cloud And The Open Banking Opportunity

Although open banking has legislative origins - and is compulsory in some countries - it is also a major catalyst to bank transformation. In addition to the opportunity to generate new revenue streams, improve services and attract new customers, Read more »

Carlos Figueredo Open Vector

Open Banking - An Opportunity for UK Banks

The appearance of open banking created an immediate concern within the banks as they would now have to share customer data, competition from challenger banks, etc. Even though it is a well-known statement these days that “innovation will come with Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel