LinkedIn Top Voice | FinTech | Marketing & Growth Expert | Thought Leader | Leadership
Open Banking to Open Economy 💡 Those incumbent banks that understand the opportunity of open banking and open data more broadly possess considerable advantages. Incumbent banks have an established position in the market, they have scale, and they have deep customer relationships with people who trust them with money. They can build on these strengths to offer new services that expand their customer base and increase profitability. In particular, a trusted relationship with customers is a unique asset. Savvy incumbent banks can curate open banking services for their customers, countering that confusion by providing reassurance and security. Banks can undertake all three of these initiatives simultaneously: power the core, expand revenue boundaries, and transform. 👨💻 Power the core Securing customer consent for data sharing is a crucial step for incumbent banks in defending their market position and preventing the outflow of customer data to competitors in the open banking arena. Without customer consent, banks may be little more than data providers, which their competitors can exploit. With customer consent, banks become consumers of data from external parties, thereby getting to know their customers better and supplying them with financial tools that build loyalty. 🚀 Expand revenue boundaries The sharing of data provides insights into financial behaviors and personalized risk assessments. Using this information, banks can offer new products tailored to previously overlooked segments such as micro and small enterprises, along with gig-economy workers. Open banking provides banks with a better assessment of the creditworthiness and the risk profiles of these potential customers. That is because banks can obtain a wide range of data through linked accounts, including transaction data from business or personal accounts, invoicing, payment history, and cash flow patterns. These details provide more insight than traditional credit bureau information, which means that banks can assess whether these new, but higher-risk, segments can manage credit responsibly. 👨🔧 Transform Open banking allows banks to acquire new customers and revenues by acting less like traditional financial intermediaries and more like technology companies. One of the most important effects of digitization has been to blur boundaries between industries and allow for new business models. Open banking allows incumbent banks to turn that pattern to their advantage. As incumbent banks accumulate capabilities and expertise, they can break down barriers between industries and help to develop banking-as-a-service (BaaS) and banking-as-a-product (BaaP). Such digital offerings would have been unimaginable until recently. Source: Strategy& - https://t.ly/_Iki0 #Innovation #Fintech #Banking #OpenBanking #OpenFinance #OpenEconomy #API #BaaS #BaaP #FinancialServices #Payments #Lending #Data