The world is changing, and financial institutions are starting to feel the heat: faced with aggressive, fast-moving competitors armed with new technologies and bent on cherry-picking the most profitable services and clients. Financial institutions are losing the advantages traditionally afforded to them through end-to-end ownership of a client. In today’s climate and into the future, they must become facilitators within an open ecosystem and focus on the aspects of their services vital for financial health, including third-party collaborations. This strategy will allow financial institutions and wealth managers to keep restless and demanding clients engaged and loyal.
But, how should financial institutions confront this new era of ‘openness’? Three drivers of innovation accelerate this:
Creating an attractive ecosystem: Financial institutions and wealth managers working in the platform economy will succeed by allowing others to innovate through their platforms.
The user experience: The idea behind promoting open banking is to improve the end-user experience, by allowing banks to easily integrate new products and services from 3rd parties.
The data: Data is one of the greatest assets that financial institutions possess. Historically, financial institutions have kept data highly guarded – but now it is time to open up and share with 3rd parties so that can utilize and create innovative technology – that in turn, the financial institution can leverage.
To survive, financial institutions and wealth managers must innovate and experiment; they must do so while also understanding that success requires collaboration and co-innovation.
“When it comes to using and deploying digital technologies, open banking has been listed as a key focus area for financial institutions and wealth managers. In a recent report, 85% of respondents said they were planning, trialling or had already fully deployed open banking solutions.”