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Open banking and the shift to an open ecosystem

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.”

Deloitte

No financial institution is an island

Out with the old and in with the new: using innovation to open up new opportunities

Challenge can bring opportunity, with technology certain to be a key tool. However, even those financial institutions that are most flexible and innovative in their use of technology cannot always be sure they are going in the right direction, or at the right speed. Not all new technologies are winners, and those that are going to be successful do not always move at the pace that is expected of them. The other problem is that new technologies generally demand new skills and infrastructure. But such specialist skills are usually scarce and expensive, and acquiring the necessary infrastructure can be costly and time-consuming.

Now, the fight is on to provide a fully connected client experience in a world where financial institutions with agile platforms are rapidly integrating new ecosystems of clients and service partners. However, only the largest have the scale and investment needed to compete for clients in this way and, at the same time, provide a superior back-office operation.

How then, can financial institutions use their data treasure troves in the open banking era, where consumers are being increasingly empowered to share their account data with other service providers? By moving fast. Because whatever opportunities are available to BigTech and fintech firms, they are available to financial institutions as well.

It is a revolutionary shift that will inevitably transform the business of wealth management, with the potential to benefit financial institutions and their clients as well as other participants within the ecosystem:

  • Co-innovation with fintechs and technology partners will allow needs to be addressed far quicker than before
  • Rapid introduction of new services and competitive functionality will keep clients interested and loyal
  • Ecosystem partners will provide the infrastructure and tools needed for their own solutions, speeding up time-to-market and making it easier to provide pay-per-use rather than fixed-cost services
  • Working with ecosystem partners removes the need to recruit and retain in-house staff with a range of skill sets
  • New functional integrations can allow banks to develop fresh revenue streams, exploiting opportunities such as the monetization of data and the ability to offer banking-as-a-service modules for other institutions and market players
  • Providing fully integrated services and applications via appropriate third parties will enable financial institutions to focus directly on their clients and ensure what they offer is genuinely useful and appealing

Learn more about competing in today’s open banking economy

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Achieve speed, scale, and greater impact through the Avaloq.one Ecosystem

With access to the right platform, we are helping financial players improve their systems through smooth integration of new services

Avaloq’s open banking infrastructure forms a rock-solid foundation for Avaloq.one Ecosystem, the platform that sits at the hub of our rich community of financial institutions, partners, fintechs, developers, investors, prospects, and clients.

“With the Avaloq.one Ecosystem, we’ve taken the initiative as a leading integration partner for financial institutions and wealth managers. We created a platform to facilitate all types of interactions that let financial institutions conveniently connect to fintechs – and quickly develop new services to surprise and delight their clients.”

Anders Christensen

Head of the Avaloq.one Ecosystem

Avaloq.one Ecosystem brings together a number of complementary features – including technical, financial and community elements – to create a flexible and effective system for addressing challenges.

At Avaloq, we are taking the initiative as the leading integration partner for financial institutions and wealth managers, helping them develop, test, and validate new products, services, and even business models. Using our standardized REST APIs, we want to eliminate the traditional hassles and complexities involved in integrating products from different fintech partners.

From the financial institution’s point of view, open APIs simplify the integration of new services, often slashing implementation times from several months to a few days. Off-the-shelf plug-and-play integration further improves processes, cutting the cost and time involved in testing new ideas – and allowing far greater freedom to experiment without damaging margins.

If you would like to know more about the Avaloq.one Ecosystem, visit Avaloq.one. Or get in touch and our ecosystem experts will provide you with the insights you need.

Our roadmap

Continuous improvement of our solutions – for the near and long term

Avaloq.one Ecosystem connects financial institutions and fintechs via an extensive marketplace. And, as our community expands, we’re increasing the number of valuable new services we can offer in key areas such as sentiment analysis, network messaging and mobile analytics. We’re also working on making the onboarding process for fintechs even smoother through self-onboarding and standardized contracting. All while maintaining and optimizing Open API coverage and sandbox functionality and usability. So that financial institutions and fintechs can improve speed and scale for an even greater impact.   

Note: The content of this roadmap is for information only and is intended to outline the general product direction; accordingly, it should not be relied upon for the purpose of making purchasing decisions. The information provided is not a commitment, promise, or legal obligation to deliver any material, code or functionality.

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