Open banking suggests a new vision, where the bank is part of a broader, highly dynamic and interconnected ecosystem, based on relations, platforms and sharing of information.
Which are the main strategic issues a bank should face and which are the future scenarios you foresee?
Open banking is the new norm of financial institution. This has been exhibited in other product and services like open access journals, open innovation and other areas. Likewise, this has been experienced in the music industry and other form of business endevours. The main issue is convinience and cost reduction. All these open innovations have lead to the easiness of doing business or any other activities with relatively low prices. In this scenario, open banking will take the same course where by services will be offered at a cheaper cost and at the convinince of the customers. At the same, no financial institution can claim ownership and regulation just like criptocurrency. In other words, the banking industry will be deregulated and the forces of demand and supply will dictate the order of the day.
Although there are benefits that would be offered by open banking such as the convenient access to financial services and financial data, there are risks involved. Security risks such as having a third party getting into the customers' accounts, taking advantage of these customers' data and abusing these data constitute potential threats to open banking.
I thank you both for your interesting contributions. You are right convenience and low costs seem to be the main drivers for open banking. But if this is going to be true the price war is endless. However, I think the game is more than convenience and low prices; major profits will come from the value delivered to customers through different pricing strategies.
I believe the future of open banking will be driven by disruptive technologies. I agree with the statements above regarding cost reductions and security concerns. However, I think one of the main issues for banking institutions will be the commoditisation of services. In order to retain customers in an environment in which services are potentially offered at no costs, banks will need to develop innovative solutions to ensure competitive advantage. For instance, the rise of FinTech is disrupting the market and offering very convenient solutions for clients. This is, in my opinion, what the future of open banking will look like.
Thanks for your contribution.
If I may add I would say that sometimes FinTech are disrupters some others they are not. However they are boosting the "banking game" to change and at a quick path. Commodisation, actually, is another banking issue, but digital technology could change this way through AI, ML and etc.
I'd like to get some more feedbacks from business cases, personal opinion, critical thinking on the way open banking is going to shape the financial industry.
Are there anyone able to give support to this issue? I thank in advance
Open banking leverages on innovative information infrastructures to redefine how financial data are created, applied, and communicated. In practice, the contribution of open standards in financial services hinges on very human perceptions of value, trust and identity. For both the traditional banking institutions, as well the new entrants of FinTech and telcos, the ability to transform promising ideas into pertinent data practices requires looking beyond the programming interfaces to understand how human intelligence shapes the opportunities and challenges of new service scenarios.
Nevertheless, Open Standards won’t transform data into value, people will.
I thank for your answer. Do you have any insights on the way to understand how human intelligence shapes the opportunities and challenges of new service scenario ? If any, please share it, or tell us how to develop such a research, given your interesting background. I thank in advance!
11FS and other fintech consultancies analyse this question in depth. In academia, this fintech domain is @Markos Zachariadis (now at Manchester) speciality.
Open Banking might become the new normal for certain groups of customers in the near future …
Gozman, D., Hedman, J., & Olsen, K. S. (2018). Open Banking: Emergent Roles, Risks & Opportunities.
Mutated market conditions, the advent of new players and digital technologies, and a significant regulatory push, are profoundly changing the banking industry. Banking business models may shift significantly from a pipeline, vertical, paradigm, to open banking models …
Omarini, A. E. (2018). Banks and fintechs: how to develop a digital open banking approach for the bank’s future.
From my point of view, the future will be led to this version of banking, because the cryptocurrency will change the rule and makes everything is electronic-based.
This means that you are considering that open banking is strictly linked to cryptocurrency. Could I ask you to figure it out a bit more! Thanks and regards
Can banking be open in the sense that there is no regulation? Banking involves trust and integrity. Ethics cannot be open ended. There are rights and wrongs and morals are involved. Open in allowing faster processing and efficiency of processes is possible.
Open in terms of operation and functionality but not from regulation!
It is all about trust!
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