Open Banking is highly considered to be transformational for the UK banking industry. Many banks and financial organizations are acknowledging benefits and opportunities with open banking. As conventional banking models are evolving, newer ways to acquire customers, generating revenue, and minimizing financial risk are starting to appear.
It might be early to say that open banking has started transforming the industry, the mainstream adoption is nearing every single day in Europe. Early adoption of open APIs is necessary for banks to get a head-start and comply with PSD2.
Open banking offers numerous opportunities for banks and third-party services. By involving banks, third-party developers, and customers, it can build more streamlined banking models that deliver innovative services at pace with minimum cost.
Here is the list of Open banking opportunities that we believe that businesses can consider to grow their business.
Acquire New Customers
It costs significant efforts and resources to acquire new customers. Open banking seems to be an opportunity that will allow banks to acquire new customers and retain the existing ones.
Transactional data can provide a lot of information on a customer. Having access to such information will allow banks to study customer’s payment behavior and prioritize them based on their growth potential. This could help them to identify the most appropriate customers and get insights into the target market. Open Banking brings a sublime opportunity for you to realign your business strategies and attract more customers onboard.
Provide Customer-centric Services
Today, customers expect fast and high-quality services. The index is much higher when it comes to banking and finance industry. Open banking presents an opportunity for businesses where they can use transactional data insights to develop intuitive products and services. To do this, consumers need to understand that their data will be an enabler. Their data will play a significant role and helping banks and Fintech companies to meet the rising expectations of consumers.
Become More Personalized and Relevant
Banking and non-banking organizations have majorly relied on basic customer details including contact details, demographic and personal preferences. Unlocking transactional data will allow them to analyze consumer behavior and provide more relevant and personalized services.
For instance, transactional data can reveal the purchasing habits of the consumer. It might include the websites that the customer uses to shop online or frequently purchased goods. All such details will allow you to offer relevant discounts and offer by collaborating with retails. It could be a sublime opportunity to grow your relationship with consumers and provide them with more personalized services.
Reduced Risk of Bad Debts
The issue of bad loans and outstanding credit due to bankruptcy has plagued the lending sector. This mostly occurs due to the lack of information that banks have about customers. They rely on third-party credit scores to decide the credit-worthiness of individuals. Open banking addresses this issue by allowing banks and Fintech firms to access consumers transactional details. The holistic view of the customer’s account details could offer a clear and complete picture of the customer’s financial status and payment behavior.
Newer Revenue Models
As open banking is becoming more popular within the financial landscape, banks and IT organizations are beginning to focus on new revenue generation models. Traditional banking business models are no longer sustainable. By sharing information access to Fintechs and third-party services, banks can open accelerate innovation and deliver the standard of services that customers want. This advanced banking ecosystem will create new opportunities to generate revenue and enhance business proposition.
Trust, openness, and technology collectively play a pivotal role in transforming the banking and financial industry. Bank-as-a-platform approach will be the next big thing for providing innovative services to customers. The unique opportunities with open banking will enable banks and Fintechs to meet customer needs in the coming times.