As we speed through the era of technology and customer oriented automated processes, financial institutions are exploiting the advantages of digital platforms to revolutionize how they generate value.
Open banking, which is a digital platform-based model, originated due to the heavy regulatory and competitive pressures put on banks. This model allows banks to display their data through tech platforms to gain the advantage of creating new product offerings and revenue streaming channels.
It may seem obvious that digital platforms are the way of the future, and how their operating capabilities are far more endless than the average bank’s. So will banks use platforms to enhance their business models? And will the future of all banking be known as open banking?
Let’s dive into some data to break down the numbers.
In a survey conducted by Celent Financial Services, it was reported that 29% of bankers would consider using a digital platform to run their banks. And 26% of bankers reported they were already using, or considering using a platform. When it comes to those who were not interested in the idea of technology working smarter, faster and harder, 32% of people reported that they may not consider integrating a digital platform for their bank.
Why are banks and bankers having such a hard time adopting innovative digital financial products that are proven to enhance their operational processes?
Reluctance to change years of standard operating procedures
Bankers have been conducting the exact same operating procedures for decades. And the model has been adequately successful. Long paperwork, heavy regulations, and monotonous lunch meetings with borrowers can be the concerns and ways of the past. Bankers need to realize that in this rapidly changing industry, they must either adapt or become accustomed to the inevitably innovative processes.
Intimidation by technology and the power it is capable of unleashing
Banks realize the unanimous shift of technological integration in literally every consumer industry around the world, but may believe they will face challenges too difficult to overcome for their specific institution. Fortunately for banks, there are services like Finastra, that provide product implementation and cloud computing assistance to make the onboarding process for banks very easy and seamless.
Executives are too narrow minded on their financial products instead of the whole customer experience
Bankers should look to expand their strategy instead of just offering financial products, a more end-to-end platform that provides a valuable customer experience (CX) is demanded.
The benefits of moving your bank to an open banking model:
Revenue Growth – create higher value from data collection to increased loan volume
Cost Reduction – reducing data collection costs and easing integration with current tech providers
Talent Management – manage your team on the digital platform, and create a user friendly experience that attracts only the best talent to your team.
Easy-to-use, low cost, no commitment
As banks overcome these fears and unknown variables, non-traditional financial institutions will find it crucial to adapt to the technology of open banking in order to stay relevant to their consumers. After all, more than a third of millennials in the U.S. believe they will not need a bank in the future.
The fact that banking is moving toward a fully digitalized industry is an irreversible fact. It is just a question of time before banks either accept that fact, or dissolve against those who do. Your consumers can see everything online and compare your banks with others to receive the best available product offerings. So why not position your bank to give it the best strategic advantage and greatest economic value?